Upland Software, Inc.(NASDAQ:UPLD) is a technology company that is currently undervalued by the market. While the company’s stock is currently trading at $4.96, its fair value is estimated at $9.75, which is 49% undervalued. This presents an exciting opportunity for investors who are looking for hidden gems in the technology sector.
Discounted Cash Flow (DCF) Model
To determine the estimated fair value of the company, we used a two-stage discounted cash flow (DCF) model. This model calculates the present value of the company’s future cash flows through discounting. It enables investors to measure the intrinsic value of Upland Software, Inc. and make informed investment decisions.
First Stage Growth
The first stage of the DCF model represents a period of higher growth. This growth is driven by the company’s expanding product portfolio and growing customer base. The company is also expected to benefit from the growing demand for cloud-based software solutions.
Stage 2 Growth
The second phase of the DCF model captures a period of steady growth. This growth is driven by the company’s continued innovation and ability to attract new customers. The company is also expected to benefit from the growing popularity of cloud-based software solutions.
Cash Flow Projections
Cash flows for the next ten years are estimated based on analyst estimates and previous free cash flow data. These calculations reflect the view that growth tends to be slower in earlier years than in later years.
Total equity value
The total value of Upland Software is the sum of the cash flows plus the discounted terminal value over the next ten years. After the necessary calculations, the total equity value of the company is estimated to be $306 million.
Fair value per share
Dividing the total equity value by the number of shares outstanding, the company’s fair value per share is estimated to be $9.75. This indicates that the company is trading at a 49% discount to its intrinsic value, providing an attractive investment opportunity.