Entertainment · NASDAQ
Current Price
$112.62
Intrinsic Value
Use the calculator below to estimate
Run a full DCF analysis on Roku, Inc. with auto-filled fundamentals, adjustable assumptions, and sensitivity heatmap.
Roku, Inc., together with its subsidiaries, operates a TV streaming platform. The company operates in two segments, Platform and Player. Its platform allows users to discover and access various movies and TV episodes, as well as live TV, news sports, shows, and others. As of December 31, 2021, the company had 60.1 million active accounts. It also provides digital and video advertising, content distribution, subscription, and billing services, as well as other commerce transactions, and brand sponsorship and promotions; and manufactures, sells, and licenses smart TVs under the Roku TV name. In addition, the company offers streaming players, and audio products and accessories under the Roku brand name; and sells branded channel buttons on remote controls of streaming devices. It provides its products and services through retailers and distributors, as well as directly to customers through its website in the United States, Canada, the United Kingdom, France, Mexico, Brazil, Chile, Peru, North and South Americas, and Europe. Roku, Inc. was incorporated in 2002 and is headquartered in San Jose, California.
ROIC (TTM)
-0.2%
ROE (TTM)
3.4%
FCF Yield
3.57%
Based on trailing twelve-month data, ROKU shows a free cash flow per share of N/A and a ROIC of -0.2%, key inputs for stock valuation using the DCF method. The P/FCF ratio of N/A and FCF yield of 3.57% are important context metrics when evaluating ROKU's stock valuation relative to peers.
The intrinsic value of ROKU depends on assumptions about future growth rate, discount rate (WACC), and terminal value. A DCF model discounts projected free cash flows back to present value — small changes in WACC can shift the estimate by 20% or more, which is why sensitivity analysis is essential.
Whether ROKU is undervalued depends on comparing the DCF-derived intrinsic value to the current market price of $112.62. A positive margin of safety (intrinsic value above market price) suggests potential undervaluation, but the degree of confidence depends on the reliability of your growth and discount rate assumptions.
To perform a DCF valuation on Roku, Inc.: (1) Start with the trailing free cash flow per share as the base, (2) project future FCF growth over 5-10 years based on Entertainment industry trends and company fundamentals, (3) apply a discount rate (WACC) reflecting ROKU's risk profile, and (4) add a terminal value for cash flows beyond the projection period.
DCF (Discounted Cash Flow) estimates what a company is worth today based on its future cash generation. For Roku, Inc., this means projecting how much free cash flow the Entertainment will produce over the next 5-10 years, then discounting those amounts to today's dollars. ROKU's ROIC of -0.2% suggests the company may face challenges generating returns above its cost of capital.
WACC (Weighted Average Cost of Capital) is the discount rate in a DCF model — it reflects the minimum return investors require. For ROKU, the capital structure and equity risk premium determine WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%.
