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CoStar Group, Inc. (CSGP) Intrinsic Value

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

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CoStar Group, Inc. (CSGP)

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Intrinsic Value (DCF)

Current$63.38
→
Intrinsic$25.37
-60%
$20.15$25.37$35.29
Current price reflects execution expectations above 14% growth — not unreasonable for quality businesses.
Range: Bear $20 → Bull $35. Current price implies expectations above the base case, closer to bull expectations.
Current price reflects assumptions at the upper end of our valuation range (bull case: $35).
Discount ↓Growth →10%12%14%16%
8%$29$30$32$34
10%$23$24$25$27
12%$20$21$22$23
14%$18$18$19$20

Bull Case

  • Bull case ($35) with 17% growth, 9% discount rate
  • Conservative 14% growth assumption is achievable based on track record

Bear Case

  • Bear case ($20) implies 68% downside at 11% growth, 12% discount
  • Trading 60% above base case — execution must exceed assumptions to justify
  • Price exceeds bull case ($35) — requires exceptional execution
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5-Year FFO Projection

Year 1$326.57M
Year 2$373.42M
Year 3$426.99M
Year 4$488.25M
Year 5$558.30M
Terminal$8.21B

📐 Model Inputs

Growth Rate14.3%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base FFO$285.60MTTM 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. Uses FFO per NAREIT standards. See FAQ below for full methodology.

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Frequently Asked Questions

Is CSGP stock undervalued or overvalued?
🔴 OVERVALUED

CSGP trades at $63.38 vs. our DCF-derived intrinsic value of $25.37, implying -62% downside. Using a 10.0% WACC and 14.3% FCF growth assumption, the current price requires growth rates above our estimates to be justified. Even our bull case ($32.66) suggests limited upside.

What is CSGP's intrinsic value?

Using a 5-year DCF model: Base FCF of $286M, projected at 14.3% 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 $-3.64B net debt and dividing by 0.41B shares: Bear $20.21 | Base $25.37 | Bull $32.66. Current price $63.38 implies -62% to base case.

How is CSGP's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 14.3% 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 ($6.71B).

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: 23.5x.