PDFS
PDF Solutions, Inc.
$42.05
High-Growth Software
80%
Revenue × Terminal Margin DCF
Strong
·
Conviction
Overvalued
Trading 78.6% above fair value
You pay
$42.05
Bear
$10.76
Fair
$23.55
Bull
$38.14
Bear
$10.76
-74.4%
12% rev growth, 17% terminal margin
Fair
$23.55
-44.0%
20% rev growth, 23% terminal margin
Bull
$38.14
-9.3%
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
8.2x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (5 analysts)
$63.00
Divergence from AlphaVal
63%
Summary
Projecting 20% revenue growth with FCF margins expanding from 0% to 23% over 10 years, discounted at 12%, the base-case value is $23.55 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 $63.00 (from 5 analysts). Our estimate is 63% below the consensus -- consider that gap carefully.
This stock is 41% 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