SPSC
SPS Commerce, Inc.
$65.50
Platform & Compounding FCF
85%
Two-stage FCF DCF
Moderate
·
Conviction
Fair Value
Trading 18.0% below fair value
You pay
$65.50
Bear
$55.88
Fair
$79.92
Bull
$105.20
Bear
$55.88
-14.7%
8% stage 1 growth, 11% discount
Fair
$79.92
+22.0%
13% stage 1 growth, 11% discount
Bull
$105.20
+60.6%
16% stage 1 growth, 11% discount
Key Value Driver
FCF growth rate (13% base case)
Terminal Value % of EV
41%
Implied Market Multiple
20.2x
Market is pricing in (growth)
9.1%
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 $67.00 from 23 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $79.92 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 $67.00 (from 23 analysts). Our estimate is 26% 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