ICF International (ICFI) Stock May Be Fairly Valued Despite Weak Long Term Returns

ICF International has climbed in the short term but its longer performance has been weak, which puts a spotlight on whether the current share price lines up with the cash the business is expected to generate. With a Discounted Cash Flow (DCF) view available, the question is how that cash flow based intrinsic value compares with where the stock now trades.

• Over the past 3 years the share price has fallen 27.5%, which raises the issue of whether the market has been reassessing the long term cash stream from ICF International.
• The company relies on converting its consulting work into dependable cash inflows, so any shift in contract quality, pricing, or execution can influence the timing and durability of those cash flows that feed into a DCF estimate.
• Prefer to judge ICF International on earnings? See what ICF International's 19.3x P/E says about the price.

The issue now is whether ICF International's current market value is adequately supported by the cash flows implied by its intrinsic value estimate.

If you are weighing whether ICF International's recent share price lines up with its cash flows, it can help to set it alongside a broader set of valuation ideas using 42 high quality undervalued stocks.

Is ICF International Fairly Priced on Cash Flow?

The Discounted Cash Flow (DCF) approach used here evaluates the cash ICF International can return to shareholders over time and discounts it back to today. Latest twelve month free cash flow is about $200.4m, which gives the model a solid starting point rather than relying only on distant forecasts.

Analysts feeding into this 2 Stage Free Cash Flow to Equity model are assuming cash generation tapers from that recent level into more modest, steady figures over the coming decade rather than sharp expansion. Under those inputs, the DCF output suggests ICF International's estimated intrinsic worth is broadly in line with where the stock trades now at $95.38, which points to a market price that already reflects these projected cash flows. Find out what ICF International could be worth using our Discounted Cash Flow (DCF) estimate.

The ICF International Narrative: What Would Justify Today's Price?

Simply Wall St Narratives pick up where that valuation question leaves off by spelling out which combinations of ICF International's future growth, margins and earnings would need to hold for the stock to trade meaningfully higher or lower than today. Rather than focusing on a single ratio or model output, each Narrative lays out the key inputs behind its fair value view so you can compare those assumptions with ICF International's actual results as they come through.

ICF International splits opinion between those who think the nonfederal shift still leaves upside and those who see the backlog record capping it.

Bull case: 11% undervalued

"Sequential improvements in procurement activity that have lifted the business development pipeline to US$9.3b, together with strong recent international government contract wins in the EU and UK..."

Discover why this Narrative puts ICF International at 11% undervalued.

Bear case: 19% overvalued

"Although ICF International highlights a growing mix of commercial, state, local, and international revenue, the roughly 3.1% five year sales CAGR implies that even a larger share of higher growth work has not translated into strong overall expansion..."

Explore why this Narrative puts ICF International at 19% overvalued.

One more piece of ICF International's puzzle before you move on

Before acting on any view of ICF International's valuation, it is worth checking who is steering the business and how their rewards line up with long term shareholder outcomes. See who runs ICF International and how they are paid.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com