TGM's two-stage DCF values Guidewire Software, Inc. (GWRE) between $53.27 and $97.45 depending on assumptions, with a base case of $71.15. 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 (8.9%) reflects its beta.
What would today's price require?
$152.15 is justified only if free cash flow grows about +33.8% a year (fading to 2.5% long-run) at a 8.9% required return — faster than the company has actually grown.
| Scenario | FCF growth (fading to 2.5%) | Discount | Value / share |
|---|---|---|---|
| Conservative | 11.7%/yr | 9.9% | $53.27 |
| Base case | 14.7%/yr | 8.9% | $71.15 |
| Optimistic | 17.7%/yr | 7.9% | $97.45 |
Current Price
$152.15
Market-Implied Growth
+33.8%/yr
vs +14.7% 5Y actual
Model Scenario Range
$53.27 – $97.45
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 GWRE (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 $236.2M · 0.08B shares · net debt $305.2M
Estimated Fair Value
$71.15
-53.2% vs $152.15
How the estimated fair value shifts with the discount rate (WACC) and terminal growth, holding your 14.7%/yr FCF growth and 10-year horizon fixed. Green = above today's $152.15; red = below. Your current case is outlined.
| WACC ↓ / Terminal → | 1.50% | 2.00% | 2.50% | 3.00% | 3.50% |
|---|---|---|---|---|---|
| 6.9% | $89.14 | $97.36 | $107 | $120 | $136 |
| 7.9% | $73.78 | $79.33 | $85.91 | $93.82 | $104 |
| 8.9% | $62.61 | $66.57 | $71.15 | $76.50 | $82.83 |
| 9.9% | $54.13 | $57.07 | $60.41 | $64.24 | $68.65 |
| 10.9% | $47.48 | $49.74 | $52.26 | $55.10 | $58.32 |
