RNG
RingCentral, Inc.
$41.06
Platform & Compounding FCF
85%
Two-stage FCF DCF
Moderate
·
Conviction
Undervalued
Trading 32.8% below fair value
You pay
$41.06
Bear
$44.51
Fair
$61.13
Bull
$76.83
Bear
$44.51
+8.4%
5% stage 1 growth, 11% discount
Fair
$61.13
+48.9%
9% stage 1 growth, 11% discount
Bull
$76.83
+87.1%
11% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (9% base case)
Terminal Value % of EV
38%
Implied Market Multiple
12.9x
Market is pricing in (growth)
3.0%
vs 8.5% base
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 $42.13 from 42 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $61.13 per share.
Warnings
Stock-based employee pay equals 621% of profits. This dilutes existing shareholders, so cash flow alone overstates what owners really earn.
Wall Street's average price target is $42.13 (from 42 analysts). Our estimate is 64% 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