PRGS
Progress Software Corporation
$40.50
Platform & Compounding FCF
85%
Two-stage FCF DCF
Strong
·
Conviction
Undervalued
Trading 80.0% below fair value
You pay
$40.50
Bear
$113.18
Fair
$202.33
Bull
$307.11
Bear
$113.18
+179.4%
10% stage 1 growth, 11% discount
Fair
$202.33
+399.5%
17% stage 1 growth, 11% discount
Bull
$307.11
+658.2%
22% stage 1 growth, 11% discount
Adjust Assumptions
17.2%
11.0%
3.0%
Key Value Driver
FCF growth rate (17% base case)
Terminal Value % of EV
44%
Implied Market Multiple
9.9x
Market is pricing in (growth)
-0.7%
vs 17.2% base
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (13 analysts)
$52.50
Divergence from AlphaVal
285%
Summary
Using a two-stage FCF DCF with 17% growth decelerating over 15 years, discounted at 11%, the base-case intrinsic value is $202.33 per share.
Warnings
Stock-based employee pay equals 89% of profits. This dilutes existing shareholders, so cash flow alone overstates what owners really earn.
Wall Street's average price target is $52.50 (from 13 analysts). Our estimate is 285% above 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