Ultra Clean Holdings, Inc. (UCTT) DCF Valuation & Fundamental Primer
Ultra Clean Holdings, Inc. (UCTT) currently trades at $29.65 with an enterprise value of $1.01B. Our proprietary institutional model rates Ultra Clean Holdings, Inc. at 88/100 (Grade: A+ · Elite SaaS Compounder). The current market price prices in an implied 5-year revenue CAGR of 29.1% vs. historical growth of 22.5% (Fairly Priced to Fundamentals).
Institutional fundamental teardown of Ultra Clean Holdings, Inc. (UCTT) covering SEC 10-K/10-Q cash flow conversion, SBC dilution friction, and Reverse-DCF valuation hurdles.
Ultra Clean Holdings, Inc. (UCTT) 3-Scenario DCF Valuation Range
Stress-test UCTT'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: $29.65).
| WACC \ Terminal | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 8.5% | $26.14 -12% | $27.74 -6% | $29.60 -0% | $31.81 +7% | $34.46 +16% |
| 9.3% | $23.54 -21% | $24.80 -16% | $26.25 -11% | $27.93 -6% | $29.90 +1% |
| 10.0% | $21.41 -28% | $22.42 -24% | $23.57 -21% | $24.88 -16% | $26.40 -11% |
| 10.8% | $19.63 -34% | $20.46 -31% | $21.38 -28% | $22.43 -24% | $23.63 -20% |
| 11.5% | $18.12 -39% | $18.80 -37% | $19.57 -34% | $20.42 -31% | $21.38 -28% |
Institutional Software Quality Scorecard (88/100 · Grade A+)
Exceptional unit economics, disciplined equity dilution, and fortress balance sheet.
Elite deferred revenue float; FCF exceeds operating income by >20%
Standard software SBC dilution; modest equity transfer to employees
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 7400% of EBIT driven by upfront annual collections
- Top-quartile software unit economics: 76.5% gross margin and 44.7% Rule of 40 score
- Net cash positive: $60.9M balance sheet buffer
Key Operational & Dilution Risks
Reverse-DCF Solver: What Growth is Priced Into UCTT?
Market implies 29.1% annual revenue growth over next 5 years (41.8% dilution-adjusted), in line with company run-rate.
Headline Reverse-DCF ignores Stock-Based Compensation (13.0% of revenue) and annual share dilution (1.8%/yr). Accounting for both requires 41.8% 5-year revenue CAGR to justify $29.65/sh on a true per-share economic cash flow basis.
Ultra Clean Holdings, Inc. (UCTT) 5-Year Fundamental Forecast
| Statement Line Item | TTM Audited Base | TTM | Y1 | Y2 | Y3 | Y4 | Y5 |
|---|---|---|---|---|---|---|---|
| Revenue | $149.5M | $149.5M | $183.2M | $224.4M | $274.9M | $336.7M | $412.5M |
| Gross Profit | $114.4M | $114.4M | $140.1M | $171.7M | $210.3M | $257.6M | $315.5M |
| Operating Income (EBIT) | $448.6K | $448.6K | $549.5K | $673.1K | $824.6K | $1.0M | $1.2M |
| Stock-Based Compensation (SBC) | $19.4M | $19.4M | $23.8M | $29.2M | $35.7M | $43.8M | $53.6M |
| Unlevered Free Cash Flow (FCF) | $33.2M | $33.2M | $40.7M | $49.8M | $61.0M | $74.8M | $91.6M |
| SBC-Adjusted True Cash Flow | $13.8M | $13.8M | $16.9M | $20.6M | $25.3M | $31.0M | $37.9M |
Software & Cloud Services Peer Comparables & Rule of 40 Regression
Rule of 40 vs. EV / Revenue Multiple Regression
OLS Fit: EV/Rev = -27.3 + 0.77 × (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 |
|---|---|---|---|---|---|---|---|---|
| Ultra Clean Holdings, Inc. | UCTT | $1.35B | $149.5M | 76.5% | 22.2% | 44.7% | 13.0% | 8.6× |
| 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 | 8.6× | $1.28B | $1.35B | $29.65 | 0.0% |
| -20% Multiple Compression | 6.9× | $1.03B | $1.09B | $23.99 | -20.0% |
| -35% Multiple Compression | 5.6× | $835.2M | $896.0M | $19.74 | -35.0% |
| Software Baseline Floor (5.0× EV/Rev) | 5.0× | $747.6M | $808.5M | $17.81 | -41.8% |
Frequently Asked Questions: Ultra Clean Holdings, Inc. (UCTT) Valuation
What is Ultra Clean Holdings, Inc. (UCTT)'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, Ultra Clean Holdings, Inc. (UCTT) has a Base Case implied value of $23.57 per share (with a Bear Case of $10.52 and a Bull Case of $42.26), compared to its current price of $29.65. The model discounts projected free cash flows at a 10.0% WACC and a 2.5% terminal growth rate.
What is Ultra Clean Holdings, Inc. (UCTT)'s Rule of 40 score and Free Cash Flow margin?
Ultra Clean Holdings, Inc. achieves a Rule of 40 score of 44.7%, combining a 22.5% revenue growth run-rate with a 22.2% TTM free cash flow margin on $149.5M 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 UCTT stock according to Reverse-DCF analysis?
At $29.65 per share (Enterprise Value of $1.28B), our Reverse-DCF solver indicates the market is pricing in a 5-year implied revenue CAGR of 29.1%, compared to Ultra Clean Holdings, Inc.'s historical CAGR of 22.5%. Overall market expectations are rated as "Fairly Priced to Fundamentals".
How does Ultra Clean Holdings, Inc. compare to Software & Cloud Services software peers?
Ultra Clean Holdings, Inc. (UCTT) earns an institutional Software Quality Score of 88/100 (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 Ultra Clean Holdings, Inc. (UCTT)'s valuation?
Ultra Clean Holdings, Inc. recorded $19.4M in TTM stock-based compensation (13.0% of revenue). When treating SBC as a cash-equivalent compensation expense, Ultra Clean Holdings, Inc.'s SBC-adjusted free cash flow yield is 1.0%, scoring 16/25 on our Shareholder Dilution Friction pillar.