Universal Display Corporation (OLED) DCF Valuation & Fundamental Primer
Universal Display Corporation (OLED) currently trades at $123.21 with an enterprise value of $4.08B. Our proprietary institutional model rates Universal Display Corporation at 90/100 (Grade: A+ · Elite SaaS Compounder). The current market price prices in an implied 5-year revenue CAGR of 19.7% vs. historical growth of 10.9% (Aggressive Growth Expectations Priced In).
Institutional fundamental teardown of Universal Display Corporation (OLED) covering SEC 10-K/10-Q cash flow conversion, SBC dilution friction, and Reverse-DCF valuation hurdles.
Universal Display Corporation (OLED) 3-Scenario DCF Valuation Range
Stress-test OLED'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: $123.21).
| WACC \ Terminal | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 8.5% | $97.25 -21% | $103.15 -16% | $110.05 -11% | $118.19 -4% | $127.96 +4% |
| 9.3% | $87.61 -29% | $92.26 -25% | $97.60 -21% | $103.80 -16% | $111.08 -10% |
| 10.0% | $79.68 -35% | $83.42 -32% | $87.66 -29% | $92.50 -25% | $98.10 -20% |
| 10.8% | $73.04 -41% | $76.10 -38% | $79.53 -35% | $83.40 -32% | $87.81 -29% |
| 11.5% | $67.41 -45% | $69.95 -43% | $72.76 -41% | $75.91 -38% | $79.46 -36% |
Institutional Software Quality Scorecard (90/100 · Grade A+)
Exceptional unit economics, disciplined equity dilution, and fortress balance sheet.
Solid cash generation with minor working capital absorption
Minimal dilution friction; management compensation aligned with shareholders
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
- Low dilution friction: SBC is only 4.6% of revenue
- Top-quartile software unit economics: 77.1% gross margin and 43.4% Rule of 40 score
- Net cash positive: $79.8M balance sheet buffer
Key Operational & Dilution Risks
Reverse-DCF Solver: What Growth is Priced Into OLED?
The current share price demands 19.7% 5-year CAGR (22.4% net of SBC & dilution)—a +8.9% acceleration over historical run-rate (10.9%). Any growth slowdown risks valuation multiple contraction.
Headline Reverse-DCF ignores Stock-Based Compensation (4.6% of revenue) and annual share dilution (0.6%/yr). Accounting for both requires 22.4% 5-year revenue CAGR to justify $123.21/sh on a true per-share economic cash flow basis.
Universal Display Corporation (OLED) 5-Year Fundamental Forecast
| Statement Line Item | TTM Audited Base | TTM | Y1 | Y2 | Y3 | Y4 | Y5 |
|---|---|---|---|---|---|---|---|
| Revenue | $647.7M | $647.7M | $718.0M | $796.0M | $882.4M | $978.3M | $1.08B |
| Gross Profit | $499.2M | $499.2M | $553.5M | $613.6M | $680.2M | $754.1M | $835.9M |
| Operating Income (EBIT) | $238.8M | $238.8M | $264.7M | $293.5M | $325.4M | $360.7M | $399.9M |
| Stock-Based Compensation (SBC) | $30.0M | $30.1M | $33.3M | $36.9M | $40.9M | $45.4M | $50.3M |
| Unlevered Free Cash Flow (FCF) | $211.1M | $211.1M | $234.0M | $259.4M | $287.6M | $318.8M | $353.4M |
| SBC-Adjusted True Cash Flow | $181.1M | $181.0M | $200.7M | $222.5M | $246.6M | $273.4M | $303.1M |
Software & Cloud Services Peer Comparables & Rule of 40 Regression
Rule of 40 vs. EV / Revenue Multiple Regression
OLS Fit: EV/Rev = -25.0 + 0.72 × (Rule of 40) · R² = 75%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 |
|---|---|---|---|---|---|---|---|---|
| Universal Display Corporation | OLED | $5.86B | $647.7M | 77.1% | 32.6% | 43.4% | 4.6% | 8.9× |
| 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 | 8.9× | $5.78B | $5.86B | $123.21 | 0.0% |
| -20% Multiple Compression | 7.1× | $4.62B | $4.70B | $98.90 | -20.0% |
| -35% Multiple Compression | 5.8× | $3.76B | $3.84B | $80.67 | -35.0% |
| Software Baseline Floor (5.0× EV/Rev) | 5.0× | $3.24B | $3.32B | $69.80 | -44.0% |
Frequently Asked Questions: Universal Display Corporation (OLED) Valuation
What is Universal Display Corporation (OLED)'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, Universal Display Corporation (OLED) has a Base Case implied value of $87.49 per share (with a Bear Case of $45.93 and a Bull Case of $138.17), compared to its current price of $123.21. The model discounts projected free cash flows at a 10.0% WACC and a 2.5% terminal growth rate.
What is Universal Display Corporation (OLED)'s Rule of 40 score and Free Cash Flow margin?
Universal Display Corporation achieves a Rule of 40 score of 43.4%, combining a 10.9% revenue growth run-rate with a 32.6% TTM free cash flow margin on $647.7M 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 OLED stock according to Reverse-DCF analysis?
At $123.21 per share (Enterprise Value of $5.78B), our Reverse-DCF solver indicates the market is pricing in a 5-year implied revenue CAGR of 19.7%, compared to Universal Display Corporation's historical CAGR of 10.9%. Overall market expectations are rated as "Aggressive Growth Expectations Priced In".
How does Universal Display Corporation compare to Software & Cloud Services software peers?
Universal Display Corporation (OLED) earns an institutional Software Quality Score of 90/100 (Grade A+ — Elite SaaS 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 Universal Display Corporation (OLED)'s valuation?
Universal Display Corporation recorded $30.0M in TTM stock-based compensation (4.6% of revenue). When treating SBC as a cash-equivalent compensation expense, Universal Display Corporation's SBC-adjusted free cash flow yield is 3.1%, scoring 25/25 on our Shareholder Dilution Friction pillar.