Forrester Research (NAS:FORR) Intrinsic Value: DCF (Earnings Based)

: $14.11 (As of Today)

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As of today (2023-03-27), Forrester Research's intrinsic value calculated from the Discounted Earnings model is $14.11.

Note: Discounted Earnings model is only suitable for predictable companies (Business Predictability Rank higher than 1-Star). If the company's predictability rank is 1-Star or Not Rated, result may not be accurate due to the low predictability of business and the data will not be stored into our database.

Forrester Research's Predictability Rank is 3-Stars.

Margin of Safety (Earnings Based) using Discounted Earnings model for Forrester Research is -127.29%.

The historical rank and industry rank for Forrester Research's Intrinsic Value: DCF (Earnings Based) or its related term are showing as below:

FORR' s Price-to-DCF (Earnings Based) Range Over the Past 10 Years
Min: 0.55 Med: 3 Max: 3.93
Current: 2.27

During the past 13 years, the highest Price-to-Intrinsic-Value-DCF (Earnings Based) Ratio of Forrester Research was 3.93. The lowest was 0.55. And the median was 3.00.

FORR's Price-to-DCF (Earnings Based) is ranked worse than
91.67% of 144 companies
in the Business Services industry
Industry Median: 0.84 vs FORR: 2.27

Forrester Research Intrinsic Value: DCF (Earnings Based) Historical Data

The historical data trend for Forrester Research's Intrinsic Value: DCF (Earnings Based) can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Forrester Research Annual Data

Trend

Dec13

Dec14

Dec15

Dec16

Dec17

Dec18

Dec19

Dec20

Dec21

Dec22

Intrinsic Value: DCF (Earnings Based)

18.89

14.11

Forrester Research Quarterly Data
	Mar18	Jun18	Sep18	Dec18	Mar19	Jun19	Sep19	Dec19	Mar20	Jun20	Sep20	Dec20	Mar21	Jun21	Sep21	Dec21	Mar22	Jun22	Sep22	Dec22
Intrinsic Value: DCF (Earnings Based)																18.89	17.48	21.41	20.35	14.11

Forrester Research Intrinsic Value: DCF (Earnings Based) Calculation

This is the intrinsic value calculated from the Discounted Earnings model with default parameters. The calculation method is the same as Discounted Cash Flow model except earnings are used in the calculation instead of free cash flow. This is the default method of calculation with GuruFocus DCF calculator.

Usually a two-stage model is used in calculating the intrinsic value with discounted cash flow model. The first stage is called growth stage; the second is called the terminal stage. In the growth stage the company grows at a faster rate. Because it cannot grow at that rate forever, a lower rate is used for the terminal stage.

GuruFocus DCF calculator is a two-stage model. The default values are defined as:

1. Discount Rate: d = 10%
A reasonable discount rate assumption should be at least the long term average return of the stock market, which can be estimated from risk free rate plus risk premium of stock market. We used the 10-Year Treasury Constant Maturity Rate as the risk free rate and rounded up to the nearest integer, then added a risk premium of 6% to get the estimated discount rate. Some investors use their expected rate of return, which is also reasonable. A typical discount rate can be anywhere between 6% - 20%.

2. Growth Rate in the growth stage: g1 = 5%
Growth Rate in the growth stage = average earnings growth rate in the past 10 years. If it is higher than 20%, we use 20%. If it is less than 5%, we use 5% instead. => For companies with Average Earnings Growth Rate in the past 10 years less than 5%, GuruFocus defaults => Growth Rate: 5%

3. Years of Growth Stage: y1 = 10

4. Terminal Growth Rate: g2 = 4%

5. Years of Terminal Growth: y2 = 10

6. EPS without NRI: eps without nri = $1.130.
GuruFocus DCF calculator is actually a Discounted Earnings calculator, EPS without NRI is used as the default. The reason we are doing this is we found that historically stock prices are more correlated with earnings than free cash flow.

All of the default settings can be changed and the results are calculated automatically.

Forrester Research's Intrinsic Value: DCF (Earnings Based) for today is calculated as:

Intrinsic Value: DCF (Earnings Based)	=	EPS without NRI	*	{[(1+g1)/(1+d)	+	(1+g1)^2/(1+d)^2	+	...	+	(1+g1)^10/(1+d)^10]
	+	(1+g1)^10/(1+d)^10	*	[(1+g2)/(1+d)	+	(1+g2)^2/(1+d)^2	+	...	+	(1+g2)^10/(1+d)^10]}

set x = (1+g1)/(1+d) = (1+0.05)/(1+0.1) = 0.95454545454545
and y = (1+g2)/(1+d) = (1+0.04)/(1+0.1) = 0.94545454545455

Intrinsic Value: DCF (Earnings Based)

EPS without NRI

{[x

x^2

...

x^10]

x^10

y^2

...

y^10]}

EPS without NRI

(1-x^10)

(1-x)

x^10

(1-y^10)

(1-y)]

1.130

12.485

14.11

Margin of Safety % (DCF Earnings Based)	=	(Intrinsic Value: DCF (Earnings Based)	-	Current Price)	/	Intrinsic Value: DCF (Earnings Based)
	=	(14.11	-	32.07)	/	14.11
	=	-127.29 %

Forrester Research (NAS:FORR) Intrinsic Value: DCF (Earnings Based) Explanation

Unlike valuation methods such as Net Current Asset Value, Tangible Book Value per Share, Graham Number, Median Ratio etc, discounted Cash Flow model evaluates the companies based on their future earnings power instead of their assets.

Be Aware

What you need to know about Discounted Earnings model:

1. The Discounted Earnings model evaluates a company based on its future earnings power
2. Growth is taken into account; therefore a faster growth company is worth more if everything else is the same.
3. Since we are projecting future growth, it is assumed that the company will grow at the same rate as it did during the past 10 years. Therefore this model works better for the companies that are relatively consistent performers.
4. The Discounted Earnings model works poorly for inconsistent performers like cyclicals.
5. Your expected return from the investment is a reasonable discount rate assumption.
6. A larger margin of safety should be required for companies with less predictable businesses.

You can screen for stocks that trade below their Intrinsic Value: DCF (FCF Based) and Intrinsic Value: DCF (Earnings Based) with the GuruFocus All-in-One Screener. Companies with a high Predictability Rank that trade at a discount to their Intrinsic Value: DCF (FCF Based) and Intrinsic Value: DCF (Earnings Based) can be found in the screen of Undervalued Predictable Companies.

Forrester Research Intrinsic Value: DCF (Earnings Based) Related Terms

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Forrester Research (NAS:FORR) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Industrials » Business Services » Forrester Research Inc (NAS:FORR) » Definitions » Intrinsic Value: DCF (Earnings Based)

Comparable Companies

Traded in Other Exchanges

FFR:Germany

Address

60 Acorn Park Drive, Cambridge, MA, USA, 02140

Website

https://www.forrester.com

Forrester Research Inc is a United States-based company that provides independent research, data, and advisory services. It operates through the following segments: The Research segment develops and delivers research, connect, and analytics products; The consulting segment includes the revenues and the related costs of the company's consulting organization, and the Events segment is engaged in developing and hosting in-person and virtual events.

Executives

Roy Sarah Le	officer: Chief People Officer	C/O FORRESTER RESEARCH, INC., 60 ACORN PARK DRIVE, CAMBRIDGE MA 02140
Warren N Romine	director	7325 16TH STREET NW, WASHINGTON DC 20012
Sharyn Leaver	officer: Chief Research Officer	C/O FORRESTER RESEARCH, INC., 60 ACORN PARK DRIVE, CAMBRIDGE MA 02140
Alicia Lee	officer: Chief Consulting Officer	C/O FORRESTER RESEARCH, INC., 60 ACORN PARK DRIVE, CAMBRIDGE MA 02140
Nathaniel Swan	officer: Chief Sales Officer	C/O FORRESTER RESEARCH, INC., 60 ACORN PARK DRIVE, CAMBRIDGE MA 02140
George F Colony	director, 10 percent owner, officer: Chairman & CEO	C/O FORRESTER RESEARCH INC, 1033 MASSACHUSETTS AVE, CAMBRIDGE MA 02138
Leo Christian Finn	officer: Chief Financial Officer	C/O FORRESTER RESEARCH, INC., 60 ACORN PARK DRIVE, CAMBRIDGE MA 02140
Michael Kasparian	officer: Chief Information Officer	C/O FORRESTER RESEARCH, 60 ACORN PARK DRIVE, CAMBRIDGE MA 02140
Shirley Macbeth	officer: Chief Marketing Officer	C/O FORRESTER RESEARCH, INC., 60 ACORN PARK DRIVE, CAMBRIDGE MA 02140
Sherri Kottmann	officer: Chief People Officer	C/O FORRESTER RESEARCH, INC., 60 ACORN PARK DRIVE, CAMBRIDGE MA 02140
Carrie Johnson	officer: Chief Research Officer	C/O FORRESTER RESEARCH, INC., 60 ACORN PARK DRIVE, CAMBRIDGE MA 02140
Jean Birch	director	3050 SOFT HORIZON WAY, LAS VEGAS NV 89135
Kelley Hippler	officer: Chief Sales Officer	C/O FORRESTER RESEARCH, INC., 60 ACORN PARK DR., CAMBRIDGE MA 02140
Anthony J Friscia	director	C/O FORRESTER RESEARCH, INC., 60 ACORN PARK DRIVE, CAMBRIDGE MA 02140
Yvonne Wassenaar	director	C/O FORRESTER RESEARCH, INC., 60 ACORN PARK DRIVE, CAMBRIDGE MA 02140