SPSC
SPS Commerce, Inc.
$62.03
Platform & Compounding FCF
85%
Two-stage FCF DCF
Moderate
·
Conviction
Fair Value
Trading 22.0% below fair value
You pay
$62.03
Bear
$55.60
Fair
$79.52
Bull
$104.67
Bear
$55.60
-10.4%
8% stage 1 growth, 11% discount
Fair
$79.52
+28.2%
13% stage 1 growth, 11% discount
Bull
$104.67
+68.7%
16% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (13% base case)
Terminal Value % of EV
41%
Implied Market Multiple
19.1x
Market is pricing in (growth)
8.4%
vs 12.7% 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 $65.38 from 23 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $79.52 per share.
Warnings
Stock-based employee pay equals 58% of profits. This dilutes existing shareholders, so cash flow alone overstates what owners really earn.
Wall Street's average price target is $65.38 (from 23 analysts). Our estimate is 29% 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