Sierra Wireless, Inc. (SWIR) DCF Valuation & Fundamental Primer
Sierra Wireless, Inc. (SWIR) currently trades at $30.99 with an enterprise value of $1.87B. Our proprietary institutional model rates Sierra Wireless, Inc. at 82/100 (Grade: A · High-Quality Compounder). The current market price prices in an implied 5-year revenue CAGR of 11.9% vs. historical growth of 24.9% (Substantial Margin of Safety).
Institutional fundamental teardown of Sierra Wireless, Inc. (SWIR) covering SEC 10-K/10-Q cash flow conversion, SBC dilution friction, and Reverse-DCF valuation hurdles.
Sierra Wireless, Inc. (SWIR) 3-Scenario DCF Valuation Range
Stress-test SWIR'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: $30.99).
| WACC \ Terminal | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 8.5% | $55.42 +79% | $58.90 +90% | $62.96 +103% | $67.75 +119% | $73.51 +137% |
| 9.3% | $49.78 +61% | $52.52 +69% | $55.67 +80% | $59.32 +91% | $63.60 +105% |
| 10.0% | $45.15 +46% | $47.36 +53% | $49.85 +61% | $52.71 +70% | $56.00 +81% |
| 10.8% | $41.28 +33% | $43.09 +39% | $45.11 +46% | $47.39 +53% | $49.98 +61% |
| 11.5% | $38.00 +23% | $39.50 +27% | $41.16 +33% | $43.01 +39% | $45.10 +46% |
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 199% of EBIT driven by upfront annual collections
- Top-quartile software unit economics: 80.6% gross margin and 56.1% Rule of 40 score
- Net cash positive: $74.1M balance sheet buffer
Key Operational & Dilution Risks
- Substantial SBC dilution drag: SBC is 20.7% of revenue ($37.4M)
Reverse-DCF Solver: What Growth is Priced Into SWIR?
The current share price only requires 11.9% 5-year CAGR (24.8% dilution-adjusted), well below historical growth of 24.9%. If the company maintains baseline execution, there is asymmetric upside.
Headline Reverse-DCF ignores Stock-Based Compensation (20.7% of revenue) and annual share dilution (1.8%/yr). Accounting for both requires 24.8% 5-year revenue CAGR to justify $30.99/sh on a true per-share economic cash flow basis.
Sierra Wireless, Inc. (SWIR) 5-Year Fundamental Forecast
| Statement Line Item | TTM Audited Base | TTM | Y1 | Y2 | Y3 | Y4 | Y5 |
|---|---|---|---|---|---|---|---|
| Revenue | $180.7M | $180.7M | $225.7M | $281.9M | $352.1M | $439.7M | $549.2M |
| Gross Profit | $145.6M | $145.6M | $181.9M | $227.2M | $283.8M | $354.4M | $442.7M |
| Operating Income (EBIT) | $28.4M | $28.4M | $35.4M | $44.3M | $55.3M | $69.0M | $86.2M |
| Stock-Based Compensation (SBC) | $37.4M | $37.4M | $46.7M | $58.4M | $72.9M | $91.0M | $113.7M |
| Unlevered Free Cash Flow (FCF) | $56.4M | $56.4M | $70.4M | $87.9M | $109.8M | $137.2M | $171.4M |
| SBC-Adjusted True Cash Flow | $19.0M | $19.0M | $23.7M | $29.6M | $37.0M | $46.2M | $57.7M |
Software & Cloud Services Peer Comparables & Rule of 40 Regression
Rule of 40 vs. EV / Revenue Multiple Regression
OLS Fit: EV/Rev = -23.5 + 0.66 × (Rule of 40) · R² = 49%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 |
|---|---|---|---|---|---|---|---|---|
| Sierra Wireless, Inc. | SWIR | $1.21B | $180.7M | 80.6% | 31.2% | 56.1% | 20.7% | 6.3× |
| 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 | 6.3× | $1.14B | $1.21B | $30.99 | 0.0% |
| -20% Multiple Compression | 5.0× | $909.3M | $983.4M | $25.17 | -20.0% |
| -35% Multiple Compression | 4.1× | $738.8M | $812.9M | $20.81 | -35.0% |
| Software Baseline Floor (5.0× EV/Rev) | 5.0× | $903.5M | $977.6M | $25.02 | -20.5% |
Frequently Asked Questions: Sierra Wireless, Inc. (SWIR) Valuation
What is Sierra Wireless, Inc. (SWIR)'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, Sierra Wireless, Inc. (SWIR) has a Base Case implied value of $49.85 per share (with a Bear Case of $20.87 and a Bull Case of $92.57), compared to its current price of $30.99. The model discounts projected free cash flows at a 10.0% WACC and a 2.5% terminal growth rate.
What is Sierra Wireless, Inc. (SWIR)'s Rule of 40 score and Free Cash Flow margin?
Sierra Wireless, Inc. achieves a Rule of 40 score of 56.1%, combining a 24.9% revenue growth run-rate with a 31.2% TTM free cash flow margin on $180.7M 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 SWIR stock according to Reverse-DCF analysis?
At $30.99 per share (Enterprise Value of $1.14B), our Reverse-DCF solver indicates the market is pricing in a 5-year implied revenue CAGR of 11.9%, compared to Sierra Wireless, Inc.'s historical CAGR of 24.9%. Overall market expectations are rated as "Substantial Margin of Safety".
How does Sierra Wireless, Inc. compare to Software & Cloud Services software peers?
Sierra Wireless, Inc. (SWIR) 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 Sierra Wireless, Inc. (SWIR)'s valuation?
Sierra Wireless, Inc. recorded $37.4M in TTM stock-based compensation (20.7% of revenue). When treating SBC as a cash-equivalent compensation expense, Sierra Wireless, Inc.'s SBC-adjusted free cash flow yield is 1.6%, scoring 10/25 on our Shareholder Dilution Friction pillar.