Are Investors Undervaluing Smartsheet Inc. (NYSE:SMAR) By 49%?
Are Investors Undervaluing Smartsheet Inc. (NYSE:SMAR) By 49%?
Key Insights
- Smartsheet's estimated fair value is US$74.87 based on 2 Stage Free Cash Flow to Equity
- Smartsheet is estimated to be 49% undervalued based on current share price of US$37.87
- Analyst price target for SMAR is US$49.28 which is 34% below our fair value estimate
Today we will run through one way of estimating the intrinsic value of Smartsheet Inc. (NYSE:SMAR) by taking the expected future cash flows and discounting them to their present value. One way to achieve this is by employing the Discounted Cash Flow (DCF) model. It may sound complicated, but actually it is quite simple!
We would caution that there are many ways of valuing a company and, like the DCF, each technique has advantages and disadvantages in certain scenarios. If you want to learn more about discounted cash flow, the rationale behind this calculation can be read in detail in the Simply Wall St analysis model.
Is Smartsheet Fairly Valued?
We use what is known as a 2-stage model, which simply means we have two different periods of growth rates for the company's cash flows. Generally the first stage is higher growth, and the second stage is a lower growth phase. In the first stage we need to estimate the cash flows to the business over the next ten years. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years.
A DCF is all about the idea that a dollar in the future is less valuable than a dollar today, so we discount the value of these future cash flows to their estimated value in today's dollars:
10-year free cash flow (FCF) estimate
2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2032 | 2033 | |
Levered FCF ($, Millions) | US$131.9m | US$201.6m | US$258.5m | US$343.7m | US$439.7m | US$500.5m | US$545.6m | US$583.7m | US$616.3m | US$644.6m |
Growth Rate Estimate Source | Analyst x10 | Analyst x11 | Analyst x12 | Analyst x4 | Analyst x2 | Analyst x2 | Est @ 9.00% | Est @ 6.99% | Est @ 5.58% | Est @ 4.59% |
Present Value ($, Millions) Discounted @ 6.8% | US$124 | US$177 | US$212 | US$264 | US$316 | US$337 | US$344 | US$344 | US$340 | US$333 |
("Est" = FCF growth rate estimated by Simply Wall St)
Present Value of 10-year Cash Flow (PVCF) = US$2.8b
The second stage is also known as Terminal Value, this is the business's cash flow after the first stage. The Gordon Growth formula is used to calculate Terminal Value at a future annual growth rate equal to the 5-year average of the 10-year government bond yield of 2.3%. We discount the terminal cash flows to today's value at a cost of equity of 6.8%.
Terminal Value (TV)= FCF2033 × (1 + g) ÷ (r – g) = US$645m× (1 + 2.3%) ÷ (6.8%– 2.3%) = US$15b
Present Value of Terminal Value (PVTV)= TV / (1 + r)10= US$15b÷ ( 1 + 6.8%)10= US$7.5b
The total value is the sum of cash flows for the next ten years plus the discounted terminal value, which results in the Total Equity Value, which in this case is US$10b. In the final step we divide the equity value by the number of shares outstanding. Compared to the current share price of US$37.9, the company appears quite good value at a 49% discount to where the stock price trades currently. Valuations are imprecise instruments though, rather like a telescope - move a few degrees and end up in a different galaxy. Do keep this in mind.
Important Assumptions
We would point out that the most important inputs to a discounted cash flow are the discount rate and of course the actual cash flows. Part of investing is coming up with your own evaluation of a company's future performance, so try the calculation yourself and check your own assumptions. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Smartsheet as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 6.8%, which is based on a levered beta of 0.987. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business.
SWOT Analysis for Smartsheet
- Currently debt free.
- Balance sheet summary for SMAR.
- Shareholders have been diluted in the past year.
- See SMAR's current ownership breakdown.
- Forecast to reduce losses next year.
- Has sufficient cash runway for more than 3 years based on current free cash flows.
- Good value based on P/S ratio and estimated fair value.
- No apparent threats visible for SMAR.
Looking Ahead:
Valuation is only one side of the coin in terms of building your investment thesis, and it is only one of many factors that you need to assess for a company. It's not possible to obtain a foolproof valuation with a DCF model. Preferably you'd apply different cases and assumptions and see how they would impact the company's valuation. For example, changes in the company's cost of equity or the risk free rate can significantly impact the valuation. Can we work out why the company is trading at a discount to intrinsic value? For Smartsheet, we've compiled three pertinent elements you should further research:
- Risks: To that end, you should be aware of the 1 warning sign we've spotted with Smartsheet .
- Future Earnings: How does SMAR's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart.
- Other High Quality Alternatives: Do you like a good all-rounder? Explore our interactive list of high quality stocks to get an idea of what else is out there you may be missing!
PS. The Simply Wall St app conducts a discounted cash flow valuation for every stock on the NYSE every day. If you want to find the calculation for other stocks just search here.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
關鍵見解
- 根據兩階段的股本自由現金流,Smartsheet的公允價值估計爲74.87美元
- 根據目前37.87美元的股價,Smartsheet的估值估計被低估了49%
- 分析師對SMAR的目標股價爲49.28美元,比我們的公允價值估計低34%
今天,我們將介紹一種估算Smartsheet Inc.(紐約證券交易所代碼:SMAR)內在價值的方法,即採用預期的未來現金流並將其折現爲現值。實現這一目標的一種方法是使用折扣現金流(DCF)模型。聽起來可能很複雜,但實際上很簡單!
我們要提醒的是,對公司進行估值的方法有很多,就像DCF一樣,每種技術在某些情況下都有優點和缺點。如果您想了解有關折扣現金流的更多信息,可以在Simply Wall St分析模型中詳細了解此計算背後的理由。
Smartsheet 的價值是否合理?
我們使用所謂的兩階段模型,這僅意味着公司的現金流有兩個不同的增長期。通常,第一階段是較高的增長階段,第二階段是較低的增長階段。在第一階段,我們需要估算未來十年的業務現金流。在可能的情況下,我們會使用分析師的估計值,但是當這些估計值不可用時,我們會從最新的估計值或報告的價值中推斷出之前的自由現金流(FCF)。我們假設自由現金流萎縮的公司將減緩其萎縮速度,而自由現金流不斷增長的公司在此期間的增長率將放緩。我們這樣做是爲了反映早期增長的放緩幅度往往比後來的幾年更大。
差價合約就是關於未來一美元的價值低於今天一美元的概念,因此我們將這些未來現金流的價值折現爲以今天的美元計算的估計價值:
10 年自由現金流 (FCF) 估計
2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | 2031 | 2032 | 2033 | |
Levered FCF(美元,百萬) | 1.3199 億美元 | 201.6 億美元 | 258.5 億美元 | 343.7 億美元 | 439.7 億美元 | 500.5 億美元 | 545.6 億美元 | 5.837 億美元 | 6.163 億美元 | 6.446 億美元 |
增長率估算來源 | 分析師 x10 | 分析師 x11 | 分析師 x12 | 分析師 x4 | 分析師 x2 | 分析師 x2 | Est @ 9.00% | Est @ 6.99% | Est @ 5.58% | Est @ 4.59% |
現值(美元,百萬)折扣 @ 6.8% | 124 美元 | 177 美元 | 212 美元 | 264 美元 | 316 美元 | 337 美元 | 344 美元 | 344 美元 | 340 美元 | 333 美元 |
(“Est” = Simply Wall St估計的FCF增長率)
十年期現金流(PVCF)的現值 = 28億美元
第二階段也稱爲終值,這是第一階段之後的企業現金流。戈登增長公式用於計算終值,其未來年增長率等於10年期國債收益率2.3%的5年平均水平。我們將終端現金流折現爲今天的價值,權益成本爲6.8%。
終端價值 (TV) = FCF2033 × (1 + g) ÷ (r — g) = 6.45億美元× (1 + 2.3%) ÷ (6.8% — 2.3%) = 150億美元
終端價值的現值 (PVTV) = 電視/ (1 + r)10= 150 億美元÷ (1 + 6.8%)10= 75 億美元
總價值是未來十年的現金流總額加上貼現的終端價值,由此得出總權益價值,在本例中爲100億美元。在最後一步中,我們將股票價值除以已發行股票的數量。與目前的37.9美元股價相比,該公司看起來物有所值,與目前的股價相比折扣了49%。但是,估值是不精確的工具,就像望遠鏡一樣——移動幾度,最終進入另一個星系。請記住這一點。
重要假設
我們要指出的是,貼現現金流的最重要投入是貼現率,當然還有實際的現金流。投資的一部分是自己對公司未來業績的評估,因此請自己嘗試計算並檢查自己的假設。DCF也沒有考慮一個行業可能的週期性,也沒有考慮公司未來的資本需求,因此它沒有全面反映公司的潛在表現。鑑於我們將Smartsheet視爲潛在股東,因此使用權益成本作爲貼現率,而不是構成債務的資本成本(或加權平均資本成本,WACC)。在此計算中,我們使用了6.8%,這是基於0.987的槓桿測試版。Beta是衡量股票與整個市場相比波動性的指標。我們的測試版來自全球可比公司的行業平均貝塔值,設定在0.8到2.0之間,這是一個穩定的業務的合理範圍。
Smartsheet 的 SWOT 分析
- 目前無債務。
- SMAR 的資產負債表摘要。
- 在過去的一年中,股東被稀釋了。
- 請參閱 SMAR 當前的所有權明細。
- 預計明年將減少損失。
- 根據當前的自由現金流,有足夠的現金流超過3年。
- 根據市銷率和估計的公允價值,物有所值。
- SMAR 沒有明顯的威脅。
展望未來:
就建立投資論點而言,估值只是硬幣的一面,它只是公司需要評估的衆多因素之一。使用DCF模型不可能獲得萬無一失的估值。最好你運用不同的案例和假設,看看它們將如何影響公司的估值。例如,公司權益成本或無風險利率的變化會對估值產生重大影響。我們能否弄清楚爲什麼公司的交易價格低於內在價值?對於Smartsheet,我們整理了三個相關要素,你應該進一步研究:
- 風險:爲此,你應該注意我們在Smartsheet中發現的1個警告信號。
- 未來收益:與同行和整個市場相比,SMAR的增長率如何?通過與我們的免費分析師增長預期圖表互動,深入了解未來幾年的分析師共識數字。
- 其他高質量的替代品:你喜歡一個優秀的全能選手嗎?瀏覽我們的高品質股票互動清單,了解您可能還會錯過什麼!
PS。Simply Wall St應用程序每天對紐約證券交易所的每隻股票進行折扣現金流估值。如果您想找到其他股票的計算方法,請在此處搜索。
對這篇文章有反饋嗎?對內容感到擔憂?直接聯繫我們。 或者,給編輯團隊 (at) simplywallst.com 發送電子郵件。
Simply Wall St的這篇文章本質上是籠統的。我們僅使用公正的方法根據歷史數據和分析師的預測提供評論,我們的文章無意作爲財務建議。它不構成買入或賣出任何股票的建議,也沒有考慮到您的目標或財務狀況。我們的目標是爲您提供由基本數據驅動的長期重點分析。請注意,我們的分析可能不考慮最新的價格敏感型公司公告或定性材料。簡而言之,華爾街沒有持有任何上述股票的頭寸。
譯文內容由第三人軟體翻譯。
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