Alight, Inc. (ALIT) DCF Valuation & Fundamental Primer
Alight, Inc. (ALIT) currently trades at $1.82 with an enterprise value of $867.4M. Our proprietary institutional model rates Alight, Inc. at 58/100 (Grade: B · Mixed Fundamental Profile). The current market price prices in an implied 5-year revenue CAGR of 13.5% vs. historical growth of -13.7% (Aggressive Growth Expectations Priced In).
Institutional fundamental teardown of Alight, Inc. (ALIT) covering SEC 10-K/10-Q cash flow conversion, SBC dilution friction, and Reverse-DCF valuation hurdles.
Alight, Inc. (ALIT) 3-Scenario DCF Valuation Range
Stress-test ALIT's 5-year growth, target FCF margin, WACC, terminal methodology, and SBC/dilution friction in real time.
Split between 5-Year Explicit Cash Flows and Discounted Terminal Value
2D Institutional Valuation Sensitivity Heatmap
Implied share price & upside/downside spread across 25 valuation states (Current Price: $1.82).
| WACC \ Terminal | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 8.5% | $0.00 N/M | $0.00 N/M | $0.13 -93% | $0.36 -80% | $0.62 -66% |
| 9.3% | $0.00 N/M | $0.00 N/M | $0.00 N/M | $0.00 N/M | $0.16 -91% |
| 10.0% | $0.00 N/M | $0.00 N/M | $0.00 N/M | $0.00 N/M | $0.00 N/M |
| 10.8% | $0.00 N/M | $0.00 N/M | $0.00 N/M | $0.00 N/M | $0.00 N/M |
| 11.5% | $0.00 N/M | $0.00 N/M | $0.00 N/M | $0.00 N/M | $0.00 N/M |
Institutional Software Quality Scorecard (58/100 · Grade B)
Viable recurring software business but carries notable dilution, lower margins, or higher leverage.
Positive FCF but lower conversion efficiency due to capex or timing
Minimal dilution friction; management compensation aligned with shareholders
Sub-par gross margins; higher cost of delivery or hardware/services mix
Moderate leverage or cash burn; monitor liquidity runway
Core Investment Strengths & Moats
- Low dilution friction: SBC is only 3.3% of revenue
Key Operational & Dilution Risks
- Lower software gross margins (34.0%), indicating higher hosting or service delivery drag
Reverse-DCF Solver: What Growth is Priced Into ALIT?
The current share price demands 13.5% 5-year CAGR (16.3% net of SBC & dilution)—a +27.2% acceleration over historical run-rate (-13.7%). Any growth slowdown risks valuation multiple contraction.
Headline Reverse-DCF ignores Stock-Based Compensation (3.3% of revenue) and annual share dilution (9.2%/yr). Accounting for both requires 16.3% 5-year revenue CAGR to justify $1.82/sh on a true per-share economic cash flow basis.
Alight, Inc. (ALIT) 5-Year Fundamental Forecast
| Statement Line Item | TTM Audited Base | TTM | Y1 | Y2 | Y3 | Y4 | Y5 |
|---|---|---|---|---|---|---|---|
| Revenue | $2.33B | $2.33B | $2.01B | $1.74B | $1.50B | $1.29B | $1.12B |
| Gross Profit | $794.0M | $794.0M | $685.2M | $591.2M | $510.2M | $440.2M | $379.9M |
| Operating Income (EBIT) | $-90.0M | $-90.0M | $-77.7M | $-67.0M | $-57.8M | $-49.9M | $-43.1M |
| Stock-Based Compensation (SBC) | $76.0M | $76.0M | $65.6M | $56.6M | $48.8M | $42.1M | $36.4M |
| Unlevered Free Cash Flow (FCF) | $131.0M | $131.1M | $113.1M | $97.6M | $84.2M | $72.7M | $62.7M |
| SBC-Adjusted True Cash Flow | $55.0M | $55.0M | $47.5M | $41.0M | $35.4M | $30.5M | $26.3M |
Software & Cloud Services Peer Comparables & Rule of 40 Regression
Rule of 40 vs. EV / Revenue Multiple Regression
OLS Fit: EV/Rev = 0.8 + 0.22 × (Rule of 40) · R² = 57%Stocks below the gold regression line trade at a discount relative to their Rule of 40 compounding efficiency.
| Company | Ticker | Market Cap | TTM Revenue | Gross Margin | FCF Margin | Rule of 40 | SBC % Rev | EV / Rev |
|---|---|---|---|---|---|---|---|---|
| Alight, Inc. | ALIT | $995.7M | $2.33B | 34.0% | 5.6% | -8.1% | 3.3% | 1.2× |
| ServiceNow | NOW | $152.61B | $10.98B | 79.2% | 31.1% | 54.2% | 15.9% | 13.9× |
| Workday, Inc. | WDAY | $50.35B | $8.00B | 75.0% | 27.4% | 43.9% | 19.0% | 6.4× |
| Salesforce | CRM | $217.10B | $37.90B | 77.2% | 32.8% | 42.8% | 8.4% | 5.8× |
| Datadog | DDOG | $46.05B | $2.68B | 80.8% | 31.1% | 57.7% | 21.3% | 17.4× |
| Snowflake Inc. | SNOW | $71.79B | $3.63B | 66.5% | 25.2% | 57.7% | 40.8% | 20.0× |
| Hubspot | HUBS | $19.89B | $2.63B | 85.0% | 21.3% | 52.7% | 19.2% | 7.7× |
| Peer Cohort Median Benchmark (N=6) | 78.2% | 29.2% | 53.5% | 19.1% | 10.8× | |||
EV / Revenue Multiple Compression Stress Test
| Multiple Scenario | EV / Revenue | Implied Enterprise Value | Implied Equity Value | Implied Share Price | Delta vs Current |
|---|---|---|---|---|---|
| Current Multiple | 1.2× | $2.81B | $995.7M | $1.82 | 0.0% |
| -20% Multiple Compression | 1.0× | $2.25B | $434.0M | $0.79 | -20.0% |
| -35% Multiple Compression | 0.8× | $1.83B | $12.7M | $0.02 | -35.0% |
| Software Baseline Floor (5.0× EV/Rev) | 5.0× | $11.66B | $9.85B | $18.00 | +315.1% |
Frequently Asked Questions: Alight, Inc. (ALIT) Valuation
What is Alight, Inc. (ALIT)'s intrinsic DCF valuation and implied share price?
Based on audited SEC 10-K/10-Q filings and a 5-year 3-statement discounted cash flow (DCF) model, Alight, Inc. (ALIT) has a Base Case implied value of -$1.73 per share (with a Bear Case of -$1.88 and a Bull Case of -$1.66), compared to its current price of $1.82. The model discounts projected free cash flows at a 10.0% WACC and a 2.5% terminal growth rate.
What is Alight, Inc. (ALIT)'s Rule of 40 score and Free Cash Flow margin?
Alight, Inc. achieves a Rule of 40 score of -8.1%, combining a -13.7% revenue growth run-rate with a 5.6% TTM free cash flow margin on $2.33B in trailing twelve-month revenue. In the Software & Cloud Services peer cohort, the median Rule of 40 benchmark is 53.5%.
What revenue growth rate is priced into ALIT stock according to Reverse-DCF analysis?
At $1.82 per share (Enterprise Value of $2.81B), our Reverse-DCF solver indicates the market is pricing in a 5-year implied revenue CAGR of 13.5%, compared to Alight, Inc.'s historical CAGR of -13.7%. Overall market expectations are rated as "Aggressive Growth Expectations Priced In".
How does Alight, Inc. compare to Software & Cloud Services software peers?
Alight, Inc. (ALIT) earns an institutional Software Quality Score of 58/100 (Grade B — Mixed Fundamental Profile). Across its Software & Cloud Services peer group (NOW, WDAY, CRM, DDOG, SNOW), the cohort trades at a median EV/TTM Revenue multiple of 10.8× and a median gross margin of 78.2%.
How does Stock-Based Compensation (SBC) impact Alight, Inc. (ALIT)'s valuation?
Alight, Inc. recorded $76.0M in TTM stock-based compensation (3.3% of revenue). When treating SBC as a cash-equivalent compensation expense, Alight, Inc.'s SBC-adjusted free cash flow yield is 5.5%, scoring 25/25 on our Shareholder Dilution Friction pillar.