CoStar Group, Inc.CSGPNASDAQ

Overview Intelligence Charts News Fundamentals Key Metrics TTM Financials Earnings Growth Rating Analysts Institutional Peers Historical

DCF Valuation

DCF Valuation Summary

Strong Buy

Fair Value: $61.78 per share(market-calibrated)

+36.8%

Upside to Fair Value

Current

$45.17

Pure Model

$62.14

Fair Value

$61.78

Bull Case

$87.36

Bear Case

$43.15

Market Reality Check

Model Terminal Growth

2.50%

Market-Implied Growth

2.08%

Calibrated Growth

2.39%

Fair value uses 75% model / 25% market-implied terminal growth. Pure model: $62.14.

What's Driving This Ratingfor CSGP

↓

CapEx normalizing toward maintenance

Historical CapEx is 7.24% of revenue (heavy investment phase). Model fades this to 2.50% by Year 10, freeing up ~$436M in annual FCF. This is the biggest driver of long-term cash flow improvement.

↑

Margin expansion modeled

Current EBIT margin is 11.10% — below the sector mature average of 30.00%. Model expands margins as the business scales and operating leverage kicks in. Year 10 EBIT reaches $2.2B (23.81% margin).

↑

Strong near-term revenue growth

Analyst consensus projects 17.31% revenue growth in Year 1, fading to 14.39% by Year 5 and 2.50% by Year 10. Revenue reaches $9.2B by Year 10 (vs $3.2B today).

↔

Perpetuity and exit methods disagree

Perpetuity growth gives $47.89/share (18.8x terminal FCF) while exit multiple gives $76.38/share (33.6x terminal FCF). The 22x EV/EBITDA exit reflects current market multiples, while the perpetuity method with 2.50% growth is more conservative. The base case averages both methods.

✓

Model and market roughly agree

Market-implied terminal growth of 2.08% is close to the model's 2.50% (only 42bps apart). The DCF assumptions are well-aligned with how the market is pricing this stock.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 65.40% indicates efficient cash generation. FCF reaches $1.7B by Year 10 (18.69% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)0.85

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)8.32%

Cost of Debt

Pre-tax Cost of Debt1.77%

Tax Rate30.00%

After-tax Cost of Debt1.24%

Equity Weight (E/V)94.86%

Debt Weight (D/V)5.14%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (94.86% × 8.32%) + (5.14% × 1.24%)

= 7.96%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$3.8B	$4.9B	$6.5B	$8.0B	$9.2B
EBIT	$423M	$541M	$721M	$1.4B	$2.2B
Tax	$127M	$162M	$216M	$428M	$657M
NOPAT	$296M	$379M	$504M	$999M	$1.5B
+ Depreciation	$182M	$232M	$309M	$380M	$438M
- Capex	$276M	$302M	$333M	$325M	$230M
- Δ NWC	$56M	$59M	$82M	$70M	$22M
Free Cash Flow	$145M	$250M	$399M	$984M	$1.7B
Discount Factor	0.926	0.795	0.682	0.585	0.465
Present Value	$135M	$199M	$272M	$576M	$799M

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$1.7B

Terminal Growth Rate2.50%

WACC7.96%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$32.2B

PV of Terminal Value$15.0B

Exit Multiple Method

Year 10 EBITDA$2.6B

Exit Multiple (EV/EBITDA)22.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$57.8B

PV of Terminal Value$26.9B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$4.3B

PV of Terminal Value$15.0B

Enterprise Value$19.3B

(-) Net Debt-$712M

Equity Value$20.0B

Shares Outstanding417M

Price per Share$47.89

Exit Multiple Method

PV of Projected FCFs$4.3B

PV of Terminal Value$26.9B

Enterprise Value$31.1B

(-) Net Debt-$712M

Equity Value$31.8B

Shares Outstanding417M

Price per Share$76.38

Pure Model Fair Value

$62.14

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	1.50%	2.00%	2.50%	3.00%	3.50%
5.96%	$78.53	$81.99	$86.46	$92.43	$100.83
6.96%	$67.54	$69.62	$72.16	$75.34	$79.45
7.96%	$59.21	$60.55	$62.14	$64.05	$66.38
8.96%	$52.56	$53.47	$54.53	$55.77	$57.23
9.96%	$47.08	$47.73	$48.46	$49.31	$50.28

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$43.15

-4.5% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 1.06

Base Case

$62.14

37.6% vs current

• Analyst consensus
• Terminal growth: 2.5%
• Beta: 0.85

Bull Case

$87.36

93.4% vs current

• +25% vs analyst consensus
• Terminal growth: 3.0%
• Beta: 0.72

Key Assumptions & Drivers✓ Using Analyst Consensus Estimates• Real Estate Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth17.31%

Year 3 Revenue Growth13.80%

Year 5 Revenue Growth14.39%

Year 7 Revenue Growth9.63%

Year 10 Revenue Growth2.50%

Terminal Growth Rate2.50%

Margin & Efficiency

Current EBIT Margin11.10%

Terminal EBIT Margin30.00%

Tax Rate30.00%

Historical Capex / Rev7.24%

Terminal Capex / Rev2.50%

NWC / Revenue10.00%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 22x EV/EBITDA (Real Estate sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

Explore More

S&P 500 Screener

Filter and sort all 500 stocks

Market Movers

Today's biggest gainers and losers

Market Heatmap

Visual sector performance