Aspen Technology is a supplier of software that optimizes process manufacturing – for energy, chemicals, engineering and construction, and other industries that manufacture and produce products from a chemical process. The company was founded in 1981 and is based in Bedford, Massachusetts.
AZPN Price Forecast Based on DCF Valuation
DCF Fair Value Target:
The table below illustrates the output of a discounted cash flow forecast using a variety of scenarios for Aspen Technology Inc. To summarize, we found that Aspen Technology Inc ranked in the 21th percentile in terms of potential gain offered. Our DCF analysis suggests the stock is overvalued by about 68.83%. As for the metrics that stood out in our discounted cash flow analysis of Aspen Technology Inc, consider:
Interest coverage, a measure of earnings relative to interest payments, is 23.69; that's higher than 83.75% of US stocks in the Technology sector that have positive free cash flow.
The business' balance sheet reveals debt to be 6% of the company's capital (with equity being the remaining amount). Approximately only 15.35% of US stocks with free cash flow have a lower reliance on debt in their capital structure.
AZPN's estimated cost of debt, based largely on its market capitalization and its interest coverage ratio, is 2%; for context, that number is higher than 48.21% of tickers in our DCF set.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
For other companies in the Technology that have a similar discounted cashflow valuation profile (and ensuing price forecasts) as AZPN, try WTT, CTXS, DDD, INTU, and VRSN.
Ladies and gentlemen, thank you for standing by and welcome to the Q3 2020 Aspen Technology Earnings Conference Call. Before we begin, I will make the safe harbor statement that during the course of this call, we may make projections or other forward-looking statements about the financial performance of the Company that involve risks and uncertainties.