- If you are wondering whether Roku at around US$124.02 is still priced fairly after its recent run, you are not alone in questioning what the current share price really reflects.
- The stock has pulled back about 4.3% over the last week, although it is still up 13.4% over the past month, 14.1% year to date, and 73.8% over the last year. The 3 year return sits at 135.7% and the 5 year return shows a decline of 62.5%.
- Recent headlines around Roku have focused on its positioning in streaming, its platform scale, and ongoing competition in the media and device space. These factors help frame how investors are thinking about its prospects and often sit in the background when the stock price moves sharply, as they influence how much growth or risk investors believe is already reflected in the current valuation.
- On Simply Wall St's valuation checklist, Roku currently scores 2 out of 6. This means the company screens as undervalued on two of six checks. The next steps are to compare what different valuation approaches say about the stock and then look at a more complete framework for thinking about value that will be covered at the end of this article.
Roku scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
Approach 1: Roku Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow model estimates what a stock could be worth by projecting future cash flows and discounting them back to todayâs value using a required rate of return.
For Roku, the model used is a 2 Stage Free Cash Flow to Equity approach. The latest twelve month free cash flow is about $527.9 million. Analysts have provided detailed forecasts out to 2030, with Simply Wall St extending those estimates further based on its own assumptions. For example, projected free cash flow for 2030 is $1.73b, with intermediate years between 2026 and 2029 ranging from $814.7 million to $1.50b in the raw forecasts.
When all those projected cash flows are discounted…