Roku, Inc. (ROKU) Intrinsic Value & DCF Valuation
Entertainment · NASDAQ
Current Price
$154.93
Intrinsic Value
$204.64
+24.3% margin of safety
What Is Roku, Inc.'s Intrinsic Value?
As of 2026-09-11, the base-case DCF model estimates the intrinsic value of Roku, Inc. (ROKU) at $204.64 per share, compared with a market price of $154.93, a margin of safety of +24.3%. The base case assumes 12.7% annual free cash flow growth and a 10.0% discount rate.
Across the sensitivity grid the estimate spans $170.89 to $242.91. Intrinsic value is an estimate built on assumptions, not a fact. A higher discount rate or slower growth pushes the estimate down, while stronger cash flow growth lifts it.
How the DCF works · Recalculate with your own assumptions · What is intrinsic value?
Is Roku, Inc. (ROKU) Undervalued?
At $154.93, ROKU trades about 24.3% below the base-case intrinsic value estimate. That is a real discount, but it stays short of the 30% margin of safety required before calling a stock undervalued.
COMPETITIVE MOAT
↑Platform Network Effects
Roku's operating system is the default choice for many smart TV manufacturers and consumers. This creates a virtuous cycle where more users attract more content providers, and vice versa.
↑Advertising Ecosystem Dominance
Roku has built a substantial advertising business on its platform. Its ability to collect user data and target ads effectively creates value for advertisers.
↑Content Aggregation and Discovery
Roku simplifies content discovery by aggregating a vast library of apps and channels. This convenience locks users into its ecosystem for entertainment consumption.
INVESTMENT RISKS
↓Regulatory Scrutiny
As Roku's advertising business grows, it may face increased regulatory scrutiny regarding data privacy and advertising practices.
↓Technological Disruption
Emerging streaming technologies or shifts in consumer viewing habits could disrupt Roku's current market position.
↓Dependence on Advertising Revenue
A significant portion of Roku's revenue comes from advertising. Economic downturns or shifts in ad spending could materially impact its financial performance.
Base case
ROKU base case valuation
Intrinsic Value
$204.64
Margin of safety
+24.3%
Expected annual return
+5.7%
Base case assumptions: 12.7% annual growth, 10.0% discount rate, 27.86x exit multiple, 5 year projection. Data as of 2026-09-11.
This base case uses default assumptions and is not financial advice. The intrinsic value changes significantly when the growth rate or discount rate changes. Open the calculator to set your own assumptions and see the full sensitivity range.
Customize the ROKU valuation
Adjust the growth rate, discount rate, and exit multiple to see how the intrinsic value and margin of safety for Roku, Inc. respond.
Open DCF Calculator for ROKUCompany Overview
Roku, Inc., alongside its affiliated companies, operates a significant platform for television streaming. The enterprise is segmented into two primary areas: Platform and Player. Through its platform, users can effortlessly explore and access a vast selection of content, including films, television series, live broadcasts, news updates, sports events, and other forms of entertainment. As of December 31, 2021, Roku had garnered 60.1 million active user accounts. Beyond its core streaming service, Roku generates revenue from diverse offerings such as digital and video advertisements, content distribution, and the management of subscriptions and billing. The company also facilitates various e-commerce transactions and provides opportunities for brand sponsorship and promotions. Roku further diversifies its business by manufacturing, marketing, and licensing smart televisions under the "Roku TV" brand. Additionally, it offers a line of Roku-branded hardware, which includes streaming devices, audio equipment, and related accessories. A specific revenue stream comes from selling dedicated channel buttons that are integrated into the remote controls of its streaming gadgets. Roku distributes its comprehensive range of products and services through multiple channels: traditional retail outlets, specialized distributors, and directly to consumers via its official website. Its operational footprint extends across the United States, Canada, the United Kingdom, France, Mexico, Brazil, Chile, Peru, and broadly throughout both North and South America, as well as Europe. Roku, Inc. was founded in 2002 and is headquartered in San Jose, California.
Financial Metrics — ROKU Stock Valuation Data
Revenue/Share (TTM)
$35.20
FCF/Share (TTM)
$5.58
ROIC (TTM)
7.4%
ROE (TTM)
13.2%
P/FCF
27.9x
EV/EBITDA
32.5x
FCF Yield
3.59%
Debt/Equity
0.17x
On a trailing twelve-month basis, ROKU generates free cash flow per share of $5.58 alongside a ROIC of 7.4%, both central inputs for a DCF valuation. Its P/FCF ratio of 27.9x and FCF yield of 3.59% then frame how ROKU is priced against peers on a cash flow basis.
Frequently Asked Questions
What is the intrinsic value of ROKU?
Roku, Inc. currently generates $5.58 in free cash flow per share. At the current price of $154.93, a DCF model would discount these cash flows at an appropriate WACC and apply a terminal growth rate to arrive at an intrinsic value. The result depends heavily on your growth and discount rate assumptions — a 1% change in WACC typically shifts the fair value estimate by 10-15%. In MiniValuator the model uses a single discount rate that you can edit directly, 10% by default, rather than a computed WACC.
Is ROKU undervalued?
ROKU trades at a P/FCF ratio of 27.9x with a free cash flow yield of 3.59%. This P/FCF is in a moderate range. However, whether ROKU is truly undervalued requires comparing the DCF intrinsic value to the current market price and evaluating whether the margin of safety is sufficient for your risk tolerance.
How do I value ROKU stock using DCF?
To perform a DCF valuation on Roku, Inc.: (1) Start with the trailing free cash flow per share ($5.58) 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 — with a debt-to-equity of 0.17x, capital structure is an important factor, and (4) add a terminal value for cash flows beyond the projection period.
What is DCF valuation and how does it apply to ROKU?
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 company will produce over the next 5-10 years, shaped by Entertainment trends, then discounting those amounts to today's dollars. ROKU's ROIC of 7.4% means the company's return on invested capital sits below the level that typically clears its cost of capital.
How does WACC affect ROKU stock valuation?
WACC (Weighted Average Cost of Capital) is the discount rate in a DCF model — it reflects the minimum return investors require. For ROKU, with a debt-to-equity ratio of 0.17x, the capital structure directly influences WACC. A 1% increase in WACC typically reduces the intrinsic value by 10-15%. At an EV/EBITDA of 32.5x, the market's implied discount rate can be reverse-engineered for comparison. In MiniValuator you set this discount rate yourself as a single editable number, 10% by default, instead of computing a formal WACC.
Learn More
- See ROKU PE Valuation → — Earnings-based stock valuation using PE ratio analysis
- DCF Methodology — Step-by-step guide to discounted cash flow analysis
- PE Methodology — Guide to PE ratio stock valuation
- WACC — Understanding the discount rate used in DCF
- Margin of Safety — How to evaluate downside protection
- Intrinsic Value — How to evaluate stock fair value
- How to Calculate Intrinsic Value — Complete guide for investors
Related Valuations
All Communication Services valuationsDCF and P/E value ROKU with different methods and assumptions, so the two conclusions can differ. Compare the P/E fair value.
Price as of 2026-09-11. Financial data from Financial Modeling Prep (trailing twelve months) · Valuation methodology by Charlie Wang.
This is an estimate, not investment advice.