VRRM
Verra Mobility Corporation
$2.94
High-Growth Software
80%
Revenue × Terminal Margin DCF
Strong
·
Conviction
Undervalued
Trading 80.7% below fair value
Bear
$18.34
+524.0%
8% rev growth, 21% terminal margin
Fair
$15.27
+419.4%
1% rev growth, 28% terminal margin
Bull
$17.21
+485.3%
1% rev growth, 32% terminal margin
Adjust Assumptions
1.0%
28.0%
12.0%
Key Value Driver
Revenue growth (1%) × margin expansion to 28%
Terminal Value % of EV
48%
Implied Market Multiple
0.4x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (12 analysts)
$6.50
Divergence from AlphaVal
135%
Summary
Projecting 1% revenue growth with FCF margins expanding from 19% to 28% over 10 years, discounted at 12%, the base-case value is $15.27 per share.
Warnings
Gross margin of 97% means each dollar of revenue is highly profitable. As the company grows, overhead costs should shrink as a share of revenue, boosting overall profits.
Wall Street's average price target is $6.50 (from 12 analysts). Our estimate is 135% above the consensus -- consider that gap carefully.
Key Risks
- Current FCF misleads — the model values future margins, not today's cash
- SBC dilution is the hidden tax: 2-4% annual share growth compounds fast
- Revenue deceleration is inevitable — the question is when and how steep