PCTY
Paylocity Holding Corporation
$120.78
Platform & Compounding FCF
85%
Two-stage FCF DCF
Moderate
·
Conviction
Fair Value
Trading 19.7% below fair value
You pay
$120.78
Bear
$94.71
Fair
$150.45
Bull
$213.88
Bear
$94.71
-21.6%
10% stage 1 growth, 11% discount
Fair
$150.45
+24.6%
16% stage 1 growth, 11% discount
Bull
$213.88
+77.1%
21% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (16% base case)
Terminal Value % of EV
43%
Implied Market Multiple
26.7x
Market is pricing in (growth)
12.8%
vs 15.9% 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 $149.67 from 41 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $150.45 per share.
Warnings
Stock-based employee pay equals 63% of profits. This dilutes existing shareholders, so cash flow alone overstates what owners really earn.
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