TGM's two-stage DCF values Pegasystems Inc. (PEGA) between $27.85 and $49.11 depending on assumptions, with a base case of $36.38. Growth is taken from the company's own record (5-year revenue CAGR (FCF growth too volatile to use)), fading to 2.5% long-run; the discount rate (8.6%) reflects its beta.
What would today's price require?
$34.42 is justified only if free cash flow grows about +6.9% a year (fading to 2.5% long-run) at a 8.6% required return — slower than the company has actually grown.
| Scenario | FCF growth (fading to 2.5%) | Discount | Value / share |
|---|---|---|---|
| Conservative | 5.3%/yr | 9.6% | $27.85 |
| Base case | 8.3%/yr | 8.6% | $36.38 |
| Optimistic | 11.3%/yr | 7.6% | $49.11 |
Current Price
$34.42
Market-Implied Growth
+6.9%/yr
vs +8.3% 5Y actual
Model Scenario Range
$27.85 – $49.11
model output — not a price target
Edit the assumptions to see how they change the estimated fair value. Opens seeded with TGM's data-driven base case for PEGA (growth from its own 5-year record, discount from its beta), so the sandbox starts where the scenarios above leave off. Illustrative model — not investment advice.
Base inputs: FCF $269.6M · 0.16B shares · net cash $212.4M
Estimated Fair Value
$36.38
+5.7% vs $34.42
How the estimated fair value shifts with the discount rate (WACC) and terminal growth, holding your 8.3%/yr FCF growth and 10-year horizon fixed. Green = above today's $34.42; red = below. Your current case is outlined.
| WACC ↓ / Terminal → | 1.50% | 2.00% | 2.50% | 3.00% | 3.50% |
|---|---|---|---|---|---|
| 6.6% | $44.97 | $49.02 | $54.06 | $60.49 | $68.98 |
| 7.6% | $37.58 | $40.27 | $43.48 | $47.38 | $52.24 |
| 8.6% | $32.29 | $34.18 | $36.38 | $38.97 | $42.06 |
| 9.6% | $28.31 | $29.70 | $31.29 | $33.11 | $35.23 |
| 10.6% | $25.21 | $26.27 | $27.46 | $28.80 | $30.33 |
