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Frontdoor, Inc. (FTDR) Intrinsic Value

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

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Frontdoor, Inc. (FTDR)

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Intrinsic Value (DCF)

Current$60.33
→
Intrinsic$50.16
-17%
$31.04$50.16$86.51
Market implies 15% growth for 5 years
FTDR trades at a premium to our conservative estimate — investors expect above-average performance.
At $60, the market prices in continued high-teens cash flow growth (15%) — likely reflecting buybacks, margin stability, and ecosystem strength.
Range: Bear $31 → Bull $87. Current price implies expectations above the base case, closer to bull expectations.
Discount ↓Growth →7%9%11%13%
8%$62$68$75$83
10%$41$45$50$55
12%$29$33$36$40
14%$22$25$27$30

Bull Case

  • Bull case ($87) offers 43% upside at 13% growth, 9% discount
  • Conservative 11% growth assumption is achievable based on track record

Bear Case

  • Bear case ($31) implies 49% downside at 9% growth, 12% discount
  • Price reflects 15% growth expectations vs 11% historical — high bar to clear
  • Trading 17% above base case — execution must exceed assumptions to justify
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5-Year Free Cash Flow Projection

Year 1$256.02M
Year 2$283.75M
Year 3$314.48M
Year 4$348.54M
Year 5$386.28M
Terminal$5.68B

📐 Model Inputs

Growth Rate10.8%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$231.00MTTM 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 FTDR stock undervalued or overvalued?
🟡 FAIRLY VALUED

FTDR trades at $60.33, within 10% of our $50.16 intrinsic value estimate. At 10.0% WACC and 10.8% FCF growth, the market is pricing in assumptions roughly aligned with the 5-year historical CAGR. The valuation range spans $32.44 (bear) to $74.47 (bull).

What is FTDR's intrinsic value?

Using a 5-year DCF model: Base FCF of $231M, projected at 10.8% 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 $798M net debt and dividing by 0.08B shares: Bear $32.44 | Base $50.16 | Bull $74.47. Current price $60.33 implies -13% to base case.

How is FTDR's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 10.8% 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 ($4.71B).

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: 20.4x.