PRGS
Progress Software Corporation
$45.41
Platform & Compounding FCF
85%
Two-stage FCF DCF
Moderate
·
Conviction
Fair Value
Trading 23.8% below fair value
You pay
$45.41
Bear
$58.28
Fair
$59.61
Bull
$65.32
Bear
$58.28
+28.3%
3% stage 1 growth, 11% discount
Fair
$59.61
+31.3%
3% stage 1 growth, 11% discount
Bull
$65.32
+43.8%
4% stage 1 growth, 11% discount
Adjust Assumptions
3.2%
11.0%
3.0%
Key Value Driver
FCF growth rate (3% base case)
Terminal Value % of EV
33%
Implied Market Multiple
10.7x
Market is pricing in (growth)
0.4%
vs 3.2% base
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (13 analysts)
$52.50
Divergence from AlphaVal
14%
Summary
Using a two-stage FCF DCF with 3% growth decelerating over 15 years, discounted at 11%, the base-case intrinsic value is $59.61 per share.
Warnings
Stock-based employee pay equals 89% 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