AMDOCS LTD (DOX) DCF Valuation & Fundamental Primer
AMDOCS LTD (DOX) currently trades at $81.04 with an enterprise value of $6.74B. Our proprietary institutional model rates AMDOCS LTD at 63/100 (Grade: B · Mixed Fundamental Profile). The current market price prices in an implied 5-year revenue CAGR of 4.4% vs. historical growth of -3.7% (Aggressive Growth Expectations Priced In).
Institutional fundamental teardown of Amdocs Limited (DOX) covering SEC 10-K/10-Q cash flow conversion, SBC dilution friction, and Reverse-DCF valuation hurdles.
AMDOCS LTD (DOX) 3-Scenario DCF Valuation Range
Stress-test DOX'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: $81.04).
| WACC \ Terminal | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 8.5% | $61.94 -24% | $65.72 -19% | $70.14 -13% | $75.35 -7% | $81.61 +1% |
| 9.3% | $55.70 -31% | $58.68 -28% | $62.10 -23% | $66.07 -18% | $70.73 -13% |
| 10.0% | $50.55 -38% | $52.95 -35% | $55.66 -31% | $58.77 -27% | $62.35 -23% |
| 10.8% | $46.24 -43% | $48.20 -41% | $50.39 -38% | $52.87 -35% | $55.69 -31% |
| 11.5% | $42.57 -47% | $44.19 -45% | $46.00 -43% | $48.01 -41% | $50.28 -38% |
Institutional Software Quality Scorecard (63/100 · Grade B)
Viable recurring software business but carries notable dilution, lower margins, or higher leverage.
Solid cash generation with minor working capital absorption
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 0.0% of revenue
Key Operational & Dilution Risks
- Lower software gross margins (36.6%), indicating higher hosting or service delivery drag
Reverse-DCF Solver: What Growth is Priced Into DOX?
The current share price demands 4.4% 5-year CAGR (4.4% net of SBC & dilution)—a +8.1% acceleration over historical run-rate (-3.7%). Any growth slowdown risks valuation multiple contraction.
Headline Reverse-DCF ignores Stock-Based Compensation (0.0% of revenue) and annual share dilution (0.0%/yr). Accounting for both requires 4.4% 5-year revenue CAGR to justify $81.04/sh on a true per-share economic cash flow basis.
AMDOCS LTD (DOX) 5-Year Fundamental Forecast
| Statement Line Item | TTM Audited Base | TTM | Y1 | Y2 | Y3 | Y4 | Y5 |
|---|---|---|---|---|---|---|---|
| Revenue | $4.53B | $4.53B | $4.37B | $4.20B | $4.05B | $3.90B | $3.75B |
| Gross Profit | $1.66B | $1.66B | $1.60B | $1.54B | $1.48B | $1.43B | $1.37B |
| Operating Income (EBIT) | $823.4M | $823.2M | $792.7M | $763.4M | $735.1M | $707.9M | $681.7M |
| Stock-Based Compensation (SBC) | $0 | $0 | $0 | $0 | $0 | $0 | $0 |
| Unlevered Free Cash Flow (FCF) | $645.1M | $645.0M | $621.2M | $598.2M | $576.1M | $554.7M | $534.2M |
| SBC-Adjusted True Cash Flow | $645.1M | $645.0M | $621.2M | $598.2M | $576.1M | $554.7M | $534.2M |
Software & Cloud Services Peer Comparables & Rule of 40 Regression
Rule of 40 vs. EV / Revenue Multiple Regression
OLS Fit: EV/Rev = -3.9 + 0.31 × (Rule of 40) · R² = 62%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 |
|---|---|---|---|---|---|---|---|---|
| AMDOCS LTD | DOX | $9.06B | $4.53B | 36.6% | 14.2% | 10.5% | — | 2.1× |
| 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 | 2.1× | $9.56B | $9.06B | $81.04 | 0.0% |
| -20% Multiple Compression | 1.7× | $7.65B | $7.14B | $63.93 | -20.0% |
| -35% Multiple Compression | 1.4× | $6.21B | $5.71B | $51.11 | -35.0% |
| Software Baseline Floor (5.0× EV/Rev) | 5.0× | $22.66B | $22.16B | $198.34 | +137.1% |
Frequently Asked Questions: AMDOCS LTD (DOX) Valuation
What is AMDOCS LTD (DOX)'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, AMDOCS LTD (DOX) has a Base Case implied value of $55.79 per share (with a Bear Case of $38.19 and a Bull Case of $71.73), compared to its current price of $81.04. The model discounts projected free cash flows at a 10.0% WACC and a 2.5% terminal growth rate.
What is AMDOCS LTD (DOX)'s Rule of 40 score and Free Cash Flow margin?
AMDOCS LTD achieves a Rule of 40 score of 10.5%, combining a -3.7% revenue growth run-rate with a 14.2% TTM free cash flow margin on $4.53B 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 DOX stock according to Reverse-DCF analysis?
At $81.04 per share (Enterprise Value of $9.56B), our Reverse-DCF solver indicates the market is pricing in a 5-year implied revenue CAGR of 4.4%, compared to AMDOCS LTD's historical CAGR of -3.7%. Overall market expectations are rated as "Aggressive Growth Expectations Priced In".
How does AMDOCS LTD compare to Software & Cloud Services software peers?
AMDOCS LTD (DOX) earns an institutional Software Quality Score of 63/100 (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 AMDOCS LTD (DOX)'s valuation?
AMDOCS LTD recorded $0 in TTM stock-based compensation (15.0% of revenue). When treating SBC as a cash-equivalent compensation expense, AMDOCS LTD's SBC-adjusted free cash flow yield is 7.1%, scoring 25/25 on our Shareholder Dilution Friction pillar.