Benchmark Electronics, Inc. (BHE) DCF Valuation & Fundamental Primer
Benchmark Electronics, Inc. (BHE) currently trades at $44.25 with an enterprise value of $1.68B. Our proprietary institutional model rates Benchmark Electronics, Inc. at 82/100 (Grade: A · High-Quality Compounder). The current market price prices in an implied 5-year revenue CAGR of 21.3% vs. historical growth of 24.0% (Fairly Priced to Fundamentals).
Institutional fundamental teardown of Benchmark Electronics, Inc. (BHE) covering SEC 10-K/10-Q cash flow conversion, SBC dilution friction, and Reverse-DCF valuation hurdles.
Benchmark Electronics, Inc. (BHE) 3-Scenario DCF Valuation Range
Stress-test BHE'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: $44.25).
| WACC \ Terminal | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 8.5% | $54.15 +22% | $57.53 +30% | $61.46 +39% | $66.12 +49% | $71.71 +62% |
| 9.3% | $48.68 +10% | $51.34 +16% | $54.39 +23% | $57.93 +31% | $62.09 +40% |
| 10.0% | $44.18 -0% | $46.32 +5% | $48.74 +10% | $51.51 +16% | $54.71 +24% |
| 10.8% | $40.42 -9% | $42.17 -5% | $44.13 -0% | $46.34 +5% | $48.86 +10% |
| 11.5% | $37.24 -16% | $38.69 -13% | $40.30 -9% | $42.10 -5% | $44.12 -0% |
Institutional Software Quality Scorecard (82/100 · Grade A)
Strong fundamentals, above-average cash generation, and robust competitive positioning.
Elite deferred revenue float; FCF exceeds operating income by >20%
Elevated equity dilution; SBC consumes substantial operating cash flow
Elite Tier-1 SaaS compounder with high gross margin and superior Rule of 40
Positive net cash cushion; self-funding operations with zero insolvency risk
Core Investment Strengths & Moats
- High-grade cash conversion: FCF is 179% of EBIT driven by upfront annual collections
- Top-quartile software unit economics: 79.1% gross margin and 49.6% Rule of 40 score
- Net cash positive: $74.0M balance sheet buffer
Key Operational & Dilution Risks
- Substantial SBC dilution drag: SBC is 17.6% of revenue ($35.9M)
Reverse-DCF Solver: What Growth is Priced Into BHE?
Market implies 21.3% annual revenue growth over next 5 years (35.5% dilution-adjusted), in line with company run-rate.
Headline Reverse-DCF ignores Stock-Based Compensation (17.6% of revenue) and annual share dilution (1.8%/yr). Accounting for both requires 35.5% 5-year revenue CAGR to justify $44.25/sh on a true per-share economic cash flow basis.
Benchmark Electronics, Inc. (BHE) 5-Year Fundamental Forecast
| Statement Line Item | TTM Audited Base | TTM | Y1 | Y2 | Y3 | Y4 | Y5 |
|---|---|---|---|---|---|---|---|
| Revenue | $204.0M | $204.0M | $252.9M | $313.6M | $388.9M | $482.2M | $597.9M |
| Gross Profit | $161.3M | $161.3M | $200.1M | $248.1M | $307.6M | $381.4M | $473.0M |
| Operating Income (EBIT) | $29.2M | $29.2M | $36.2M | $44.8M | $55.6M | $69.0M | $85.5M |
| Stock-Based Compensation (SBC) | $35.9M | $35.9M | $44.5M | $55.2M | $68.4M | $84.9M | $105.2M |
| Unlevered Free Cash Flow (FCF) | $52.2M | $52.2M | $64.7M | $80.3M | $99.6M | $123.4M | $153.1M |
| SBC-Adjusted True Cash Flow | $16.3M | $16.3M | $20.2M | $25.1M | $31.1M | $38.6M | $47.8M |
Software & Cloud Services Peer Comparables & Rule of 40 Regression
Rule of 40 vs. EV / Revenue Multiple Regression
OLS Fit: EV/Rev = -31.7 + 0.84 × (Rule of 40) · R² = 78%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 |
|---|---|---|---|---|---|---|---|---|
| Benchmark Electronics, Inc. | BHE | $1.59B | $204.0M | 79.1% | 25.6% | 49.6% | 17.6% | 7.4× |
| 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 | 7.4× | $1.52B | $1.59B | $44.25 | 0.0% |
| -20% Multiple Compression | 5.9× | $1.21B | $1.29B | $35.81 | -20.0% |
| -35% Multiple Compression | 4.8× | $986.0M | $1.06B | $29.48 | -35.0% |
| Software Baseline Floor (5.0× EV/Rev) | 5.0× | $1.02B | $1.09B | $30.42 | -32.8% |
Frequently Asked Questions: Benchmark Electronics, Inc. (BHE) Valuation
What is Benchmark Electronics, Inc. (BHE)'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, Benchmark Electronics, Inc. (BHE) has a Base Case implied value of $48.74 per share (with a Bear Case of $20.82 and a Bull Case of $89.44), compared to its current price of $44.25. The model discounts projected free cash flows at a 10.0% WACC and a 2.5% terminal growth rate.
What is Benchmark Electronics, Inc. (BHE)'s Rule of 40 score and Free Cash Flow margin?
Benchmark Electronics, Inc. achieves a Rule of 40 score of 49.6%, combining a 24.0% revenue growth run-rate with a 25.6% TTM free cash flow margin on $204.0M 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 BHE stock according to Reverse-DCF analysis?
At $44.25 per share (Enterprise Value of $1.52B), our Reverse-DCF solver indicates the market is pricing in a 5-year implied revenue CAGR of 21.3%, compared to Benchmark Electronics, Inc.'s historical CAGR of 24.0%. Overall market expectations are rated as "Fairly Priced to Fundamentals".
How does Benchmark Electronics, Inc. compare to Software & Cloud Services software peers?
Benchmark Electronics, Inc. (BHE) earns an institutional Software Quality Score of 82/100 (Grade A — High-Quality Compounder). 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 Benchmark Electronics, Inc. (BHE)'s valuation?
Benchmark Electronics, Inc. recorded $35.9M in TTM stock-based compensation (17.6% of revenue). When treating SBC as a cash-equivalent compensation expense, Benchmark Electronics, Inc.'s SBC-adjusted free cash flow yield is 1.0%, scoring 10/25 on our Shareholder Dilution Friction pillar.