IRDM
Iridium Communications Inc.
$50.49
Platform & Compounding FCF
75%
Two-stage FCF DCF
Strong
·
Conviction
Overvalued
Trading 60.4% above fair value
You pay
$50.49
Bear
$22.18
Fair
$31.48
Bull
$39.94
Bear
$22.18
-56.1%
4% stage 1 growth, 11% discount
Fair
$31.48
-37.7%
7% stage 1 growth, 11% discount
Bull
$39.94
-20.9%
9% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (7% base case)
Terminal Value % of EV
36%
Implied Market Multiple
26.9x
Market is pricing in (growth)
12.9%
vs 7.0% 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 $49.75 from 14 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $31.48 per share.
Warnings
Stock-based employee pay equals 45% of profits. This dilutes existing shareholders, so cash flow alone overstates what owners really earn.
Wall Street's average price target is $49.75 (from 14 analysts). Our estimate is 46% 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