Everpure, Inc. (P) stock intrinsic value fair value estimate & owner earnings analysis

Everpure, Inc. (formerly Pure Storage) sells all-flash data storage systems and, increasingly, subscription storage services (Evergreen and Portworx software). Revenue reached $3.66 billion in fiscal 2026 (year ended February 1, 2026), up from $3.17 billion, and contracted-but-unrecognized revenue was about $3.7 billion. We value the business on owner earnings: operating cash flow, minus the cash benefit from growing customer prepayments and other working-capital swings, minus stock compensation (a real cost paid in shares), minus the part of capital spending needed just to stand still. On that basis the business earns far less than its headline cash flow suggests. In fiscal 2026 cash from operations was $880 million, but $482 million was stock compensation, $76 million came from working-capital movement (mostly customers prepaying subscriptions) and about $233 million was maintenance capital spending, leaving roughly $90 million, or about $0.26 per diluted share. The prior years were $0.12 (fiscal 2025), $0.04 (fiscal 2024) and $0.17 (fiscal 2023); the years before fiscal 2023 were negative on this basis. Because the business only became meaningfully profitable on this measure in fiscal 2023, we measure from then, and use the median of those four years, about $0.15 per share, as the earnings level rather than the latest and highest year. Owner earnings rose 119% in fiscal 2026 from a very small base; our base case assumes only 8% a year, well below that, because one year off a small base is not a run rate. Base case, about $3.00 per share: $0.15 growing 8% a year for ten years, then held flat for ten more years, discounted at 6%. The growth credited is what the business has demonstrated: revenue growth of 12% to 16% in each of the last two years, a recurring subscription base with $3.7 billion contracted, and buybacks that have kept the share count roughly flat despite heavy stock compensation. We do not credit hyperscaler storage wins beyond what is shipping, share gains, or margin expansion. After year ten we credit only continuation of existing renewals, not further growth. Bear case, about $0.30 per share: owner earnings stay near the fiscal 2024 low of $0.04 for ten years with no growth, because stock compensation keeps rising (up 14% in fiscal 2026 to $482 million) and capital spending keeps absorbing cash. The filing warns that the one hyperscale customer relationship could fall short of expectations and that component purchase commitments could then become a burden. Bull case, about $6.90 per share: the fiscal 2026 level of $0.26 grows 12% a year for ten years (the pace of the last two years' revenue growth), then holds flat for ten years, with the existing hyperscale customer's shipments continuing as already begun. What would make this wrong: stock compensation growing faster than cash flow would push the numbers toward the bear case; conversely, if the prepayment inflows we strip out prove to be a permanent, recurring feature of the subscription model, true earning power is higher than we show. The company's pending acquisition of 1touch is too small and new for us to credit. Working-capital lines in earlier years could not all be traced to a single consistent tag, so we used the cash-flow statements directly, and they reconcile to reported operating cash flow.