PDFS
PDF Solutions, Inc.
$39.22
High-Growth Software
80%
Revenue × Terminal Margin DCF
Strong
·
Conviction
Overvalued
Trading 68.0% above fair value
You pay
$39.22
Bear
$10.67
Fair
$23.35
Bull
$37.82
Bear
$10.67
-72.8%
12% rev growth, 17% terminal margin
Fair
$23.35
-40.5%
20% rev growth, 23% terminal margin
Bull
$37.82
-3.6%
26% rev growth, 26% terminal margin
Adjust Assumptions
20.0%
23.0%
12.0%
Key Value Driver
Revenue growth (20%) × margin expansion to 23%
Terminal Value % of EV
67%
Implied Market Multiple
7.7x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (5 analysts)
$52.20
Divergence from AlphaVal
55%
Summary
Projecting 20% revenue growth with FCF margins expanding from 0% to 23% over 10 years, discounted at 12%, the base-case value is $23.35 per share.
Warnings
Our estimate assumes profit margins grow from 0% to 23% over 10 years. If that improvement stalls, the company is worth considerably less.
Wall Street's average price target is $52.20 (from 5 analysts). Our estimate is 55% below the consensus -- consider that gap carefully.
This stock is 45% below its 52-week high, with weak or declining earnings. That combination often signals real trouble, even though the valuation below is based on other fundamentals.
Key Risks
- Current FCF misleads — the model values future margins, not today's cash
- SBC dilution is the hidden tax: 2-4% annual share growth compounds fast
- Revenue deceleration is inevitable — the question is when and how steep