CARG
CarGurus, Inc.
$36.56
Platform & Compounding FCF
50%
Two-stage FCF DCF
Strong
·
Conviction
Undervalued
Trading 42.3% below fair value
You pay
$36.56
Bear
$44.78
Fair
$63.33
Bull
$82.31
Bear
$44.78
+22.5%
7% stage 1 growth, 11% discount
Fair
$63.33
+73.2%
12% stage 1 growth, 11% discount
Bull
$82.31
+125.2%
15% stage 1 growth, 11% discount
Adjust Assumptions
11.6%
11.0%
3.0%
Key Value Driver
FCF growth rate (12% base case)
Terminal Value % of EV
40%
Implied Market Multiple
14.1x
Market is pricing in (growth)
4.2%
vs 11.6% base
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (24 analysts)
$41.17
Divergence from AlphaVal
54%
Summary
Using a two-stage FCF DCF with 12% growth decelerating over 15 years, discounted at 11%, the base-case intrinsic value is $63.33 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 $41.17 (from 24 analysts). Our estimate is 54% 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