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Arcosa, Inc. (ACA) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Arcosa, Inc. (ACA)

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Intrinsic Value (DCF)

Current$115.77
→
Intrinsic$84.86
-27%
$47.94$84.86$155.06
Market implies 14% growth for 5 years
ACA trades at a premium to our conservative estimate — investors expect above-average performance.
At $116, the market prices in 14% annual cash flow growth — a moderate expectation aligned with historical trends (8%).
Range: Bear $48 → Bull $155. Current price implies expectations above the base case, closer to bull expectations.
Discount ↓Growth →4%6%8%10%
8%$107$119$133$147
10%$67$76$85$95
12%$45$51$58$66
14%$31$36$41$47

Bull Case

  • Bull case ($155) offers 34% upside at 10% growth, 9% discount
  • Conservative 8% growth assumption is achievable based on track record

Bear Case

  • Bear case ($48) implies 59% downside at 7% growth, 12% discount
  • Price reflects 14% growth expectations vs 8% historical — high bar to clear
  • Trading 27% above base case — execution must exceed assumptions to justify
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5-Year Free Cash Flow Projection

Year 1$337.75M
Year 2$365.28M
Year 3$395.05M
Year 4$427.25M
Year 5$462.08M
Terminal$6.80B

📐 Model Inputs

Growth Rate8.2%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$312.30MTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

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Frequently Asked Questions

Is ACA stock undervalued or overvalued?
🔴 OVERVALUED

ACA trades at $115.77 vs. our DCF-derived intrinsic value of $84.86, implying -22% downside. Using a 10.0% WACC and 8.2% FCF growth assumption, the current price requires growth rates above our estimates to be justified. Even our bull case ($128.17) suggests limited upside.

What is ACA's intrinsic value?

Using a 5-year DCF model: Base FCF of $312M, projected at 8.2% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 10.0% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $1.56B net debt and dividing by 0.05B shares: Bear $52.52 | Base $84.86 | Bull $128.17. Current price $115.77 implies -22% to base case.

How is ACA's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 8.2% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=10.0%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($5.71B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 18.3x.