F5, Inc.FFIVNASDAQ

Overview Intelligence Charts News Fundamentals Key Metrics Financials Growth Insiders

DCF Valuation

DCF Valuation Summary

Strong Buy

Fair Value: $427.96 per share(market-calibrated)

+49.6%

Upside to Fair Value

Current

$286.12

Pure Model

$449.68

Fair Value

$427.96

Bull Case

$541.83

Bear Case

$367.26

Market Reality Check

Model Terminal Growth

3.75%

Market-Implied Growth

0.50%

Calibrated Growth

2.61%

Fair value uses 65% model / 35% market-implied terminal growth. Pure model: $449.68.

What's Driving This Ratingfor FFIV

✓

CapEx already efficient

CapEx at 1.24% of revenue is already at or below sector maintenance level. No normalization needed — cash conversion is already strong.

✓

Premium margins already priced in

EBIT margin of 38.15% is already well above sector average. The model holds this level — there's limited room for margin expansion to drive upside. Valuation depends primarily on revenue growth.

→

Moderate revenue growth

Analyst consensus projects 5.91% revenue growth, fading to 3.75% by Year 10. Revenue reaches $4.2B (vs $3.1B today).

↔

Perpetuity and exit methods disagree

Perpetuity growth gives $378.53/share (20.6x terminal FCF) while exit multiple gives $520.82/share (33.7x terminal FCF). The 28x EV/EBITDA exit reflects current market multiples, while the perpetuity method with 3.75% growth is more conservative. The base case averages both methods.

🎯

Market pricing in lower growth than model

The market implies only 0.50% perpetual growth — 325bps below the model's 3.75%. This suggests the market sees headwinds or risks not in the model.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 83.01% indicates efficient cash generation. FCF reaches $1.5B by Year 10 (34.59% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)1.01

Market Risk Premium4.50%

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

Cost of Equity (Re)9.04%

Cost of Debt

Pre-tax Cost of Debt0.00%

Tax Rate14.35%

After-tax Cost of Debt0.00%

Equity Weight (E/V)97.11%

Debt Weight (D/V)2.89%

WACC Calculation

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

WACC = (97.11% × 9.04%) + (2.89% × 0.00%)

= 8.78%

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	$3.3B	$3.4B	$3.5B	$3.8B	$4.2B
EBIT	$1.2B	$1.3B	$1.3B	$1.4B	$1.6B
Tax	$179M	$188M	$192M	$207M	$231M
NOPAT	$1.1B	$1.1B	$1.1B	$1.2B	$1.4B
+ Depreciation	$115M	$121M	$124M	$133M	$149M
- Capex	$41M	$43M	$44M	$47M	$53M
- Δ NWC	$18M	$5M	$13M	$14M	$15M
Free Cash Flow	$1.1B	$1.2B	$1.2B	$1.3B	$1.5B
Discount Factor	0.919	0.777	0.657	0.555	0.431
Present Value	$1.0B	$927M	$798M	$726M	$630M

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

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$1.5B

Terminal Growth Rate3.75%

WACC8.78%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$30.2B

PV of Terminal Value$13.0B

Exit Multiple Method

Year 10 EBITDA$1.8B

Exit Multiple (EV/EBITDA)28.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$49.3B

PV of Terminal Value$21.2B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$8.1B

PV of Terminal Value$13.0B

Enterprise Value$21.1B

(-) Net Debt-$852M

Equity Value$21.9B

Shares Outstanding58M

Price per Share$378.53

Exit Multiple Method

PV of Projected FCFs$8.1B

PV of Terminal Value$21.2B

Enterprise Value$29.3B

(-) Net Debt-$852M

Equity Value$30.2B

Shares Outstanding58M

Price per Share$520.82

Pure Model Fair Value

$449.68

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

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	2.75%	3.25%	3.75%	4.25%	4.75%
6.78%	$555.78	$580.41	$613.19	$658.94	$727.29
7.78%	$483.78	$497.91	$515.56	$538.21	$568.35
8.78%	$430.14	$439.02	$449.68	$462.68	$478.92
9.78%	$387.72	$393.66	$400.59	$408.77	$418.58
10.78%	$352.85	$357.00	$361.75	$367.23	$373.61

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

$367.26

28.4% vs current

• -25% vs analyst consensus
• Terminal growth: 3.3%
• Beta: 1.26

Base Case

$449.68

57.2% vs current

• Analyst consensus
• Terminal growth: 3.8%
• Beta: 1.01

Bull Case

$541.83

89.4% vs current

• +25% vs analyst consensus
• Terminal growth: 4.3%
• Beta: 0.86

Key Assumptions & Drivers• Technology Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth5.91%

Year 3 Revenue Growth1.62%

Year 5 Revenue Growth3.75%

Year 7 Revenue Growth3.75%

Year 10 Revenue Growth3.75%

Terminal Growth Rate3.75%

Margin & Efficiency

Current EBIT Margin38.15%

Tax Rate14.35%

Historical Capex / Rev1.24%

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: 28x EV/EBITDA (Technology 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