CARG
CarGurus, Inc.
$29.32
Platform & Compounding FCF
80%
Two-stage FCF DCF
Strong
·
Conviction
Undervalued
Trading 57.0% below fair value
You pay
$29.32
Bear
$46.77
Fair
$68.17
Bull
$90.62
Bear
$46.77
+59.5%
8% stage 1 growth, 11% discount
Fair
$68.17
+132.5%
13% stage 1 growth, 11% discount
Bull
$90.62
+209.1%
16% stage 1 growth, 11% discount
Adjust Assumptions
12.6%
11.0%
3.0%
Key Value Driver
FCF growth rate (13% base case)
Terminal Value % of EV
41%
Implied Market Multiple
11.3x
Market is pricing in (growth)
1.2%
vs 12.6% base
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (24 analysts)
$40.67
Divergence from AlphaVal
68%
Summary
Using a two-stage FCF DCF with 13% growth decelerating over 15 years, discounted at 11%, the base-case intrinsic value is $68.17 per share.
Warnings
Stock-based employee pay equals 32% of profits. This dilutes existing shareholders, so cash flow alone overstates what owners really earn.
Wall Street's average price target is $40.67 (from 24 analysts). Our estimate is 68% above 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