Hey there! I ended up giving you the DCF analysis on Discord but I'll drop it in here as well. I've attached an image of the analysis and numbers. And here was my comments from the Discord:
This is making a few assumptions, of course. Such as the maintenance of strong margins, as well as lower dilution.
7.4% rate of return (discount rate) is simply Park Lawn's WACC.
THis is actually in my opinion a pretty.... modest estimate of FCF growth as well.
Over the last 3 years Park Lawn has grown FCF by around 125%. I only factor in low double digit FCF growth here.
If we go down to a lower terminal growth rate, we get a bit more modest share price of $44. But, this company is still significantly discounted at these levels.
The company is becoming increasingly more efficient. When you look to the company's FCF to sales, you're looking at 2.9% in 2018, 3.8% in 2019, 7% in 2020, 14% in 2021.
It will be very interesting to see what they do moving forward.