EVERTEC, Inc. (EVTC) DCF Valuation & Fundamental Primer
EVERTEC, Inc. (EVTC) currently trades at $29.71 with an enterprise value of $3.68B. Our proprietary institutional model rates EVERTEC, Inc. at 67/100 (Grade: B+ · Quality Software Operator). The current market price prices in an implied 5-year revenue CAGR of 4.9% vs. historical growth of 13.4% (Substantial Margin of Safety).
Institutional fundamental teardown of EVERTEC, Inc. (EVTC) covering SEC 10-K/10-Q cash flow conversion, SBC dilution friction, and Reverse-DCF valuation hurdles.
EVERTEC, Inc. (EVTC) 3-Scenario DCF Valuation Range
Stress-test EVTC'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: $29.71).
| WACC \ Terminal | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 8.5% | $53.02 +78% | $57.01 +92% | $61.67 +108% | $67.17 +126% | $73.77 +148% |
| 9.3% | $46.52 +57% | $49.67 +67% | $53.27 +79% | $57.46 +93% | $62.37 +110% |
| 10.0% | $41.18 +39% | $43.70 +47% | $46.57 +57% | $49.84 +68% | $53.62 +80% |
| 10.8% | $36.71 +24% | $38.77 +31% | $41.09 +38% | $43.70 +47% | $46.68 +57% |
| 11.5% | $32.91 +11% | $34.63 +17% | $36.53 +23% | $38.66 +30% | $41.05 +38% |
Institutional Software Quality Scorecard (67/100 · Grade B+)
Solid software model with clear operating leverage, partially offset by standard SBC or moderate burn.
Strong cash conversion; 100%+ of operating profit turns into free cash
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
- High cash conversion: 100%+ of operating income converted to free cash flow
- Low dilution friction: SBC is only 3.6% of revenue
Key Operational & Dilution Risks
- Lower software gross margins (51.9%), indicating higher hosting or service delivery drag
Reverse-DCF Solver: What Growth is Priced Into EVTC?
The current share price only requires 4.9% 5-year CAGR (7.5% dilution-adjusted), well below historical growth of 13.4%. If the company maintains baseline execution, there is asymmetric upside.
Headline Reverse-DCF ignores Stock-Based Compensation (3.6% of revenue) and annual share dilution (0.4%/yr). Accounting for both requires 7.5% 5-year revenue CAGR to justify $29.71/sh on a true per-share economic cash flow basis.
EVERTEC, Inc. (EVTC) 5-Year Fundamental Forecast
| Statement Line Item | TTM Audited Base | TTM | Y1 | Y2 | Y3 | Y4 | Y5 |
|---|---|---|---|---|---|---|---|
| Revenue | $845.5M | $845.5M | $959.1M | $1.09B | $1.23B | $1.40B | $1.59B |
| Gross Profit | $439.1M | $439.1M | $498.1M | $565.0M | $640.9M | $727.1M | $824.8M |
| Operating Income (EBIT) | $165.7M | $165.6M | $187.9M | $213.1M | $241.8M | $274.3M | $311.2M |
| Stock-Based Compensation (SBC) | $30.3M | $30.3M | $34.3M | $39.0M | $44.2M | $50.1M | $56.9M |
| Unlevered Free Cash Flow (FCF) | $171.6M | $171.6M | $194.7M | $220.9M | $250.6M | $284.2M | $322.4M |
| SBC-Adjusted True Cash Flow | $141.4M | $141.4M | $160.4M | $181.9M | $206.4M | $234.1M | $265.6M |
Software & Cloud Services Peer Comparables & Rule of 40 Regression
Rule of 40 vs. EV / Revenue Multiple Regression
OLS Fit: EV/Rev = -20.6 + 0.64 × (Rule of 40) · R² = 80%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 |
|---|---|---|---|---|---|---|---|---|
| EVERTEC, Inc. | EVTC | $1.90B | $845.5M | 51.9% | 20.3% | 33.7% | 3.6% | 3.1× |
| 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 | 3.1× | $2.59B | $1.90B | $29.71 | 0.0% |
| -20% Multiple Compression | 2.5× | $2.08B | $1.38B | $21.60 | -20.0% |
| -35% Multiple Compression | 2.0× | $1.69B | $993.0M | $15.52 | -35.0% |
| Software Baseline Floor (5.0× EV/Rev) | 5.0× | $4.23B | $3.53B | $55.24 | +63.0% |
Frequently Asked Questions: EVERTEC, Inc. (EVTC) Valuation
What is EVERTEC, Inc. (EVTC)'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, EVERTEC, Inc. (EVTC) has a Base Case implied value of $46.66 per share (with a Bear Case of $17.33 and a Bull Case of $83.84), compared to its current price of $29.71. The model discounts projected free cash flows at a 10.0% WACC and a 2.5% terminal growth rate.
What is EVERTEC, Inc. (EVTC)'s Rule of 40 score and Free Cash Flow margin?
EVERTEC, Inc. achieves a Rule of 40 score of 33.7%, combining a 13.4% revenue growth run-rate with a 20.3% TTM free cash flow margin on $845.5M 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 EVTC stock according to Reverse-DCF analysis?
At $29.71 per share (Enterprise Value of $2.59B), our Reverse-DCF solver indicates the market is pricing in a 5-year implied revenue CAGR of 4.9%, compared to EVERTEC, Inc.'s historical CAGR of 13.4%. Overall market expectations are rated as "Substantial Margin of Safety".
How does EVERTEC, Inc. compare to Software & Cloud Services software peers?
EVERTEC, Inc. (EVTC) earns an institutional Software Quality Score of 67/100 (Grade B+ — Quality Software Operator). 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 EVERTEC, Inc. (EVTC)'s valuation?
EVERTEC, Inc. recorded $30.3M in TTM stock-based compensation (3.6% of revenue). When treating SBC as a cash-equivalent compensation expense, EVERTEC, Inc.'s SBC-adjusted free cash flow yield is 7.4%, scoring 25/25 on our Shareholder Dilution Friction pillar.