SLP
Simulations Plus, Inc.
$15.37
Distressed or Transitioning
75%
Current FCF × Depressed Multiple
Mild
·
Conviction
Fair Value
Trading 7.4% below fair value
You pay
$15.37
Bear
$12.36
Fair
$16.59
Bull
$20.85
Bear
$12.36
-19.6%
FCF continues to decline, 4x multiple
Fair
$16.59
+8.0%
Current FCF stabilizes, 6x multiple
Bull
$20.85
+35.7%
Credible recovery, multiple re-rates to 8x
Key Value Driver
Whether the core business model is intact or structurally impaired
Implied Market Multiple
16.0x
Summary
Our base-case estimate uses Current FCF × Depressed Multiple. We then blend that result with the average analyst price target of $56.00 from 8 analysts, using a 20% weight on analyst consensus. That produces an estimated intrinsic value of $16.59 per share.
Warnings
Don't assume past cash flow levels will return — the company's troubles may have permanently reduced its ability to generate profits.
A stock can look cheap on paper and still lose half its value if the underlying business is permanently damaged.
The wide range between our best and worst cases is intentional — pretending to know a precise value for a troubled company would be misleading.
Wall Street's average price target is $56.00 (from 8 analysts). Our estimate is 88% below the consensus -- consider that gap carefully.
Key Risks
- Bullish DCF projections are fundamentally unknowable for distressed companies
- M&A speculation can floor the stock above intrinsic value temporarily
- Management credibility is a key input — new CEO expands the bull case