ATEN
A10 Networks, Inc.
$36.23
Platform & Compounding FCF
50%
Two-stage FCF DCF
Strong
·
Conviction
Overvalued
Trading 52.3% above fair value
You pay
$36.23
Bear
$16.62
Fair
$23.79
Bull
$31.51
Bear
$16.62
-54.1%
8% stage 1 growth, 11% discount
Fair
$23.79
-34.3%
14% stage 1 growth, 11% discount
Bull
$31.51
-13.0%
18% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (14% base case)
Terminal Value % of EV
42%
Implied Market Multiple
49.3x
Market is pricing in (growth)
21.0%
vs 13.6% base
Summary
Our base-case estimate uses a two-stage discounted cash flow model based on free cash flow. We then blend that result with the average analyst price target of $30.00 from 20 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $23.79 per share.
Warnings
Stock-based employee pay equals 48% of profits. This dilutes existing shareholders, so cash flow alone overstates what owners really earn.
Wall Street's average price target is $30.00 (from 20 analysts). Our estimate is 28% below the consensus -- consider that gap carefully.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions