- Wondering if Roku at around $94 is still a deal or if the easy money has already been made? You are not alone; that is exactly what we are going to unpack here.
- The stock is up 26.9% year to date and 12.4% over the last year, even after a choppy month where it slipped 10.5% and is down 2.3% in the last week, reminding investors that volatility and opportunity often travel together.
- Recent headlines have focused on Roku expanding its advertising ecosystem and deepening content partnerships, which investors see as key to monetizing its large user base. At the same time, ongoing competition in streaming hardware and platforms has kept sentiment mixed, helping to explain the sharp price swings.
- On our framework, Roku scores a 3/6 valuation check rating, suggesting it screens as undervalued on some metrics but not across the board. We will walk through what different valuation methods say about the stock today and finish with a more intuitive way to think about its true worth.
Approach 1: Roku Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow model estimates what a company is worth by projecting the cash it can generate in the future and then discounting those cash flows back to today in dollar terms.
For Roku, the model starts with last twelve months Free Cash Flow of about $394.9 million and uses a 2 Stage Free Cash Flow to Equity approach. Analysts provide detailed estimates for the next few years, with Simply Wall St extrapolating further out. This results in projected Free Cash Flow rising to roughly $1.31 billion by 2029 and continuing to grow through 2035. Each of these future cash flows is discounted back, reflecting both the time value of money and Rokuโs risk profile.
When all those discounted cash flows are combined, the model derives an estimated intrinsic value of $155.27 per share. Compared with a current share price around $94,…