Is Syneos Health, Inc. (NASDAQ:SYNH) trading at a 40% discount?


key insight

  • Using the two-tiered free cash flow to equity, the estimated fair value of Syneos Health is US$66.13.
  • Current share price of $39.46 indicates Syneos Health may be 40% undervalued
  • Analyst Price Target of $40.20 for SYNH 39% lower than fair value estimate

Syneos Health, Inc. stock price in February (NASDAQ: SYNH) does it reflect what it’s really worth? Today, we estimate the intrinsic value of stocks by taking expected future cash flows and discounting them to today’s value. This is done using the discounted cash flow (DCF) model. Believe it or not, as this example shows, it’s not that hard to understand!

It is worth pointing out that the DCF is not perfect for all situations, as companies may be assessed in different ways. If you want to learn a little more about intrinsic values, simply the Wall St analytical model.

See the latest analysis from Syneos Health


We use a two stage growth model. This simply means taking into account his two phases of the company’s growth. In the early stage, the company may have a high growth rate, and it is usually assumed that there is a steady growth rate in the second stage. First, you need to estimate your cash flow over the next 10 years. We use analyst estimates when available, but if these are not available, we extrapolate previous free cash flow (FCF) from previous estimates or reported values. Over this period, we expect companies with shrinking free cash flow to contract at a slower rate, and those with growing free cash flow to see slower growth. This is to reflect that growth tends to slow in the early years rather than in later years.

In general, we assume that a dollar today is worth more than a dollar in the future, so the sum of these future cash flows is discounted to today’s value.

10-Year Free Cash Flow (FCF) Forecast

Leverage FCF ($, million) $394.1 million$402.3 million$474.8 million$507.8 million$535.6 million$559.5 million$580.4 million$599.2 million$616.5 million$632.8 million
growth rate sourceAnalyst x 4Analyst x 32 analystsEst @ 6.94%estimated @ 5.48%Est @ 4.46%Est @ 3.74%Est @ 3.24%estimated @ 2.89%estimated @ 2.64%
Present Value ($, Million) Discount @ 9.4% $360$336$363$355$342$327$310$293$275$258

(“Est” = FCF growth rate estimated by Simply Wall St)
10-Year Present Value of Cash Flows (PVCF) = US$3.2 billion

After calculating the present value of the future cash flows for the first 10 years, we need to calculate the terminal value. This takes into account all future cash flows after the first stage. We use the Gordon-Growth formula to calculate the terminal value at a future annual growth rate equal to the 5-year average 2.1% of the 10-year Treasury yield. Discount the final cash flows to their present value at a 9.4% cost of capital.

Terminal value (TV)= FCF2032 × (1 + g) ÷ (r – g) = $633 million × (1 + 2.1%) ÷ (9.4%– 2.1%) = $8.8 billion

Present Value of Terminal Value (PVTV)= television / (1 + r)Ten= US$8.8 billion ÷ ( 1 + 9.4%)Ten= US$3.6 billion

The total value, or equity value, is the sum of the present value of the future cash flows, in this case US$6.8 billion. The final step is to divide the stock value by the number of outstanding shares. Compared to the current stock price of $39.5, the company is 40% cheaper than its current stock price and looks significantly undervalued. But remember that this is a rough estimate, garbage in, garbage out, just like any complex expression.

NasdaqGS: SYNH Discount Cash Flow Feb 20, 2023


The most important input to discounted cash flows is the discount rate and, of course, the actual cash flows. Part of investing is also self-evaluating the company’s future performance. So try the calculations yourself and check your assumptions. The DCF also does not give a complete picture of a company’s potential performance, as it does not take into account the cyclicality of the industry or the company’s future capital requirements. Given that we view Syneos Health as a potential shareholder, the cost of capital is used as the discount rate rather than the cost of capital (or weighted average cost of capital, WACC) that accounts for the liability. For this calculation we used 9.4% based on a leverage beta of 1.230. Beta is a measure of a stock’s volatility relative to the market as a whole. Our betas are derived from industry average betas of globally comparable companies and are capped between 0.8 and 2.0. This is a reasonable range for a stable business.

Syneos Health SWOT Analysis


  • Revenue growth over the past year has outpaced the industry.
  • Debt is well covered by income.

  • Revenue growth over the past year has been below the five-year average.

  • Annual revenue is projected to increase over the next three years.
  • Good value based on P/E ratio and estimated fair value.

  • Debt is not fully covered by operating cash flow.
  • Annual revenue is projected to grow more slowly than the US market.

Go ahead:

A company’s valuation is important, but ideally it’s not the only analytical factor that scrutinizes the company. A DCF model cannot give foolproof estimates. If possible, apply different cases and assumptions to see how they affect your company’s valuation. For example, changes in a company’s cost of equity or risk-free ratio can have a significant impact on valuations. Why is the intrinsic value higher than the current stock price? There are three basic things to look for in Syneos Health.

  1. risk: Every company has them and we found One warning sign for Syneos Health you should know about
  2. future earnings: How does SYNH’s growth rate compare to its peers and the wider market? free analyst growth forecast chart.
  3. Other solid businesses: Low debt, high return on equity and a strong past performance are the cornerstones of a strong business.why not explore An interactive list of stocks with solid business fundamentals To see if there are other companies you might not be considering!

PS. The Simply Wall St app provides discounted cash flow valuations for all NASDAQGS stocks daily.If you want to find calculations for other stocks search.

Valuation is complicated, but we’re here to help make it simple.

Check out our comprehensive analysis on whether Syneos Health may be overrated or underrated. Fair value estimates, risks and warnings, dividends, insider trading and financial health.

View Free Analysis

This article by Simply Wall St is general in nature. We provide comments based on historical data and analyst projections using only unbiased methodologies and our articles are not intended as financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. We aim to deliver long-term focused analysis based on fundamental data. Please note that our analysis may not take into account the latest price-sensitive company announcements or qualitative materials. Is not …

Leave a Reply

Your email address will not be published. Required fields are marked *

Skip to content