In our latest analysis, we do a reverse DCF valuation to find out how Elastic needs to perform in order to justify the current market cap.
TLDR:
Implied revenue CAGR of 35% for 5 years, EBIT margins at 25% in year 10, and $1.3b FCFF p.a. at maturity. The market may be overly bullish on revenue growth, as historical trends indicate deceleration. Free cash flows are expected to come after significant reinvestment. The company competes with some of the largest companies and the technology is partly available as open source, making the stock high-risk.
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What Does a Reverse DCF Imply for Elastic N.V. (NYSE:ESTC)
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In our latest analysis, we do a reverse DCF valuation to find out how Elastic needs to perform in order to justify the current market cap.
TLDR:
Implied revenue CAGR of 35% for 5 years, EBIT margins at 25% in year 10, and $1.3b FCFF p.a. at maturity. The market may be overly bullish on revenue growth, as historical trends indicate deceleration. Free cash flows are expected to come after significant reinvestment. The company competes with some of the largest companies and the technology is partly available as open source, making the stock high-risk.
Analysis:
https://seekingalpha.com/article/4539901-what-is-priced-in-in-elastics-current-market-cap#comment-93309054