DNOW
Dnow Inc.
$14.20
Platform & Compounding FCF
50%
Two-stage FCF DCF
Moderate
·
Conviction
Undervalued
Trading 25.2% below fair value
You pay
$14.20
Bear
$12.37
Fair
$18.98
Bull
$25.78
Bear
$12.37
-12.9%
7% stage 1 growth, 11% discount
Fair
$18.98
+33.7%
12% stage 1 growth, 11% discount
Bull
$25.78
+81.6%
15% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (12% base case)
Terminal Value % of EV
40%
Implied Market Multiple
18.7x
Market is pricing in (growth)
8.1%
vs 11.7% 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 $16.50 from 16 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $18.98 per share.
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