Using an unlevered Free Cash Flow to Firm (FCFF) model, we project CoStar Group, Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 17.3% to 14.4% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 26, DPO 23, DIO 14). At a 7.6% WACC with mid-year discounting, the terminal value (94% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 22.0x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $49.06 per share, suggesting CSGP is undervalued by 17.7% at the current price of $41.68.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 445 | 500 | 569 | 663 | 758 | 777 |
| (−) Net Interest | 34 | 38 | 44 | 51 | 58 | 60 |
| (+) D&A | 235 | 287 | 348 | 425 | 394 | 403 |
| EBITDA | 714 | 825 | 961 | 1,139 | 1,210 | 1,240 |
| (−) Tax | 167 | 188 | 213 | 249 | 284 | — |
| (−) CapEx | 323 | 363 | 413 | 481 | 550 | — |
| (−) ΔWC | 60 | 31 | 39 | 53 | 54 | — |
| Free Cash Flow (FCF) | 165 | 244 | 295 | 357 | 322 | — |
| Peers' EBITDA Multiple | 22.0x | |||||
| Terminal Value | 27,310 | |||||
| WACC / Discount Rate | 7.62% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 159 | 218 | 246 | 276 | 231 | 18,916 |
| Enterprise Value | 20,046 | |||||
| Projection Period | 1,130 | 5.6% | ||||
| Terminal Value | 18,916 | 94.4% | ||||
| (−) Current Net Debt | (589) | |||||
| Equity Value | 20,635 | |||||
| (÷) Outstanding Shares | 421M | |||||
| Fair Price | $49 | +17.7% | ||||
| WACC \ EV/EBITDA Exit Multiple | 18.0x | 20.0x | 22.0x | 24.0x | 26.0x |
|---|---|---|---|---|---|
| 5.6% | $45 | $49 | $54 | $58 | $63 |
| 6.6% | $43 | $47 | $51 | $56 | $60 |
| 7.6% | $41 | $45 | $49 | $53 | $57 |
| 8.6% | $39 | $43 | $47 | $51 | $55 |
| 9.6% | $38 | $41 | $45 | $49 | $52 |
Current price: $41.68. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.