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Formula Systems (1985) Ltd. (FORTY) Intrinsic Value

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

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Formula Systems (1985) Ltd. (FORTY)

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Intrinsic Value (DCF)

Current$170.01
→
Intrinsic$411.10
+142%
$276.99$411.10$665.93
Market implies 1% growth for 5 years
DCF analysis suggests FORTY could have 142% upside at 13% growth — verify assumptions match your view.
At $170, the market prices in only 1% growth — below historical 13%, suggesting low expectations.
Range: Bear $277 → Bull $666. Current price implies expectations below the bear case — very conservative expectations.
Discount ↓Growth →9%11%13%15%
8%$496$540$588$639
10%$348$378$411$446
12%$266$289$313$339
14%$214$232$251$272

Bull Case

  • Bull case ($666) offers 292% upside at 16% growth, 9% discount
  • Price below even worst-case scenario — strong margin of safety
  • Market-implied growth (1%) ≤ historical CAGR (13%)

Bear Case

  • Bear case ($277) with 11% growth, 12% discount rate
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5-Year Free Cash Flow Projection

Year 1$334.28M
Year 2$378.15M
Year 3$427.79M
Year 4$483.94M
Year 5$547.46M
Terminal$8.06B

📐 Model Inputs

Growth Rate13.1%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$295.49MTTM 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 FORTY stock undervalued or overvalued?
🟢 UNDERVALUED

FORTY trades at $170.01 vs. our DCF-derived intrinsic value of $411.10, implying +146% upside. At a 10.0% WACC and 13.1% projected FCF growth, the market appears to be underpricing the present value of FORTY's future cash flows. The bear case ($281.31) still suggests upside, providing margin of safety.

What is FORTY's intrinsic value?

Using a 5-year DCF model: Base FCF of $295M, projected at 13.1% 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 $182M net debt and dividing by 0.02B shares: Bear $281.31 | Base $411.10 | Bull $592.61. Current price $170.01 implies +146% to base case.

How is FORTY's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 13.1% 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 ($6.61B).

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: 22.4x.