As of May 22, 2025, FARO Technologies Inc has a Discounted Cash Flow (DCF) derived fair value of $10.19 per share. With the current market price at $42.05, this represents a potential upside of -75.8%.
| Key Metrics | Value |
|---|---|
| DCF Fair Value (5-year) | $7.77 |
| DCF Fair Value (10-year) | $10.19 |
| Potential Upside (5-year) | -81.5% |
| Potential Upside (10-year) | -75.8% |
| Discount Rate (WACC) | 8.7% - 25.2% |
Revenue is projected to grow from $342 million in 12-2024 to $523 million by 12-2034, representing a compound annual growth rate of approximately 4.3%.
| Fiscal Year | Revenue (USD millions) | Growth |
|---|---|---|
| 12-2024 | 342 | 5% |
| 12-2025 | 362 | 6% |
| 12-2026 | 376 | 4% |
| 12-2027 | 398 | 6% |
| 12-2028 | 421 | 6% |
| 12-2029 | 441 | 5% |
| 12-2030 | 450 | 2% |
| 12-2031 | 469 | 4% |
| 12-2032 | 480 | 2% |
| 12-2033 | 510 | 6% |
| 12-2034 | 523 | 3% |
Net profit margin is expected to improve from -3% in 12-2024 to 9% by 12-2034, driven by operational efficiency and economies of scale.
| Fiscal Year | Net Profit (USD millions) | Profit Margin |
|---|---|---|
| 12-2024 | (9) | -3% |
| 12-2025 | 5 | 1% |
| 12-2026 | 11 | 3% |
| 12-2027 | 18 | 5% |
| 12-2028 | 25 | 6% |
| 12-2029 | 32 | 7% |
| 12-2030 | 34 | 8% |
| 12-2031 | 37 | 8% |
| 12-2032 | 39 | 8% |
| 12-2033 | 42 | 8% |
| 12-2034 | 45 | 9% |
with a 5-year average of $12 million. Projected CapEx is expected to maintain at approximately 4% of revenue.
Depreciation is based on an average useful life of 5 years for capital assets.
| Fiscal Year | D&A (USD millions) |
|---|---|
| 12-2025 | 14 |
| 12-2026 | 14 |
| 12-2027 | 14 |
| 12-2028 | 14 |
| 12-2029 | 15 |
| 12-2030 | 15 |
Net working capital is expected to increase gradually, with projected changes affecting free cash flow.
| Components | Average Days |
|---|---|
| Days Receivables | 94 |
| Days Inventory | 83 |
| Days Payables | 58 |
| Fiscal Year | EBITDA | Tax | CapEx | Change in NWC | FCF |
|---|---|---|---|---|---|
| 2025 | 25 | 2 | 13 | 12 | (2) |
| 2026 | 34 | 4 | 14 | (0) | 16 |
| 2027 | 42 | 7 | 14 | 6 | 15 |
| 2028 | 53 | 9 | 15 | 7 | 21 |
| 2029 | 63 | 12 | 16 | 4 | 31 |
| Valuation Method | Fair Price (USD) | Potential Upside |
|---|---|---|
| 5-Year DCF (Growth) | 7.77 | -81.5% |
| 10-Year DCF (Growth) | 10.19 | -75.8% |
| 5-Year DCF (EBITDA) | 21.10 | -49.8% |
| 10-Year DCF (EBITDA) | 18.77 | -55.4% |
Is FARO Technologies Inc (FARO) a buy or a sell? FARO Technologies Inc is definitely a sell. Based on our DCF analysis, FARO Technologies Inc (FARO) appears to be overvalued with upside potential of -75.8%. The company's strong projected growth in revenue and profitability, coupled with consistent capital expenditure, supports our positive outlook on its intrinsic value.
Key investment drivers include:
Investors should consider reducing exposure at the current market price of $42.05.