If you are following Manhattan Associates, you might be asking yourself, "Is this the time to buy, hold or move on?" It is a fair question given how this stock has kept investors guessing lately. After a remarkable run over the past several years, the stock is still up 53.2% over three years and a notable 113.1% across five years. The more recent performance has been choppy. Shares have dropped 2.0% in just the last week, 9.6% over the past month, and the year-to-date slide sits at 26.8%. That is quite a swing from the big gains seen not too long ago.
Moves like this often reflect changing perceptions about the risks or the outlook for a company. In the case of Manhattan Associates, the broader software sector has seen some sector rotation as investors debate how much further some growth names can run. While there has not been a headline event directly tied to the latest dip, this shift in sentiment has pushed the valuation of the stock firmly back into the spotlight.
So, how undervalued might Manhattan Associates be right now? Based on a standard valuation process that checks for underpricing across six different criteria, it only scores a 1 out of 6. That hints at a business that is still priced for a fair bit of optimism, or perhaps one where the story is more nuanced than the simple numbers suggest.
Next, we will dig into exactly how these valuation methods work, where Manhattan Associates measures up, and why understanding what truly drives value might be even more important.
Manhattan Associates scores just 1/6 on our valuation checks.
Approach 1: Manhattan Associates Discounted Cash Flow (DCF) Analysis
The Discounted Cash Flow (DCF) model estimates a company's intrinsic value by projecting its future cash flows and discounting them back to today's dollars. This process reflects what those future earnings are truly worth right now.
For Manhattan Associates, the most recent reported Free Cash Flow stands at $308 million. Analyst projections anticipate steady growth, with estimates rising annually and Simply Wall St extrapolating those figures through 2035. By 2029, Free Cash Flow is expected to reach $665.9 million. Beyond that, optimistic but more speculative forecasts have the company potentially generating over $1 billion in annual Free Cash Flow within the next decade.
Using this method, the estimated fair value of Manhattan Associates stock is $218.50 per share. That is approximately 9.9% higher than the stock's recent trading price, suggesting the shares are trading at a small discount based on these long-term cash flow assumptions.