PRGS
Progress Software Corporation
$29.78
Platform & Compounding FCF
85%
Two-stage FCF DCF
Moderate
·
Conviction
Fair Value
Trading 24.9% below fair value
You pay
$29.78
Bear
$38.69
Fair
$39.64
Bull
$43.89
Bear
$38.69
+29.9%
3% stage 1 growth, 11% discount
Fair
$39.64
+33.1%
3% stage 1 growth, 11% discount
Bull
$43.89
+47.4%
4% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (3% base case)
Terminal Value % of EV
33%
Implied Market Multiple
11.1x
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 $45.00 from 13 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $39.64 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