SMAR - Smartsheet's DCF: I See A 25% Upside Potential In The Share Price

• Smartsheet offers software as a service for collaboration and work management.
• The management expects contract value growth in 2022. This means that new and existing clients appreciate the solutions obtained, and are ready to pay more money for premium solutions.
• Smartsheet is showing that clients almost always come back. In 2021 and 2022, the company expects to report double-digit dollar-based net retention.
• I am expecting sales growth of 16%-15% from 2023 to 2030, CFO/Sales close to 17% in 2030, and FCF/Sales close to 20%. I expect free cash flow to increase gradually from $6 million in 2023 to $387 million in 2030. My terminal FCF stands at $400 million.
• With a beta of 1.05-1.15 and the cost of equity around 7.2%-8.3%, I believe that most investors will be using a WACC of around 7.2%-8.3%. I wanted to remain conservative. I used a WACC of 7.8%.

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