CARG
CarGurus, Inc.
$28.24
Platform & Compounding FCF
50%
Two-stage FCF DCF
Strong
·
Conviction
Undervalued
Trading 53.6% below fair value
You pay
$28.24
Bear
$41.70
Fair
$60.85
Bull
$80.97
Bear
$41.70
+47.7%
8% stage 1 growth, 11% discount
Fair
$60.85
+115.5%
13% stage 1 growth, 11% discount
Bull
$80.97
+186.7%
16% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (13% base case)
Terminal Value % of EV
41%
Implied Market Multiple
10.9x
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 $38.25 from 23 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $60.85 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 $38.25 (from 23 analysts). Our estimate is 79% 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