Temenos (SWX:TEMN): Evaluating Valuation After New CHF 100 Million Share Buyback Authorization

Temenos (SWX:TEMN) just rolled out a new share buyback, authorizing up to CHF 100 million of repurchases through 2026. For investors, this is a clear signal about how management views the current valuation.

See our latest analysis for Temenos.

The new buyback lands after a strong run, with Temenos posting a 17.97% 3 month share price return and a 60.26% 3 year total shareholder return. This suggests momentum is building as investors reassess its growth profile and risk.

If this kind of renewed confidence has you thinking bigger, it could be a good moment to see what else is gaining traction via fast growing stocks with high insider ownership.

Yet with the stock trading slightly above analyst targets after a strong multi year rebound, investors now face a key question: is Temenos still mispriced, or is the market already baking in the next leg of growth?

Price-to-Earnings of 21.3x: Is it justified?

On a price-to-earnings multiple of 21.3 times, Temenos looks modestly cheaper than many software peers, even after its recent share price strength.

The price-to-earnings ratio compares the current share price to the company’s earnings, a key yardstick for profitable, mature software businesses like Temenos.

Here, the market is paying less per unit of Temenos earnings than it does for both the broader European Software sector and a selected peer group. This hints that expectations for future profitability may still be conservative despite the rally.

Relative to the European Software industry average of 25.8 times earnings, and an even higher 23.8 times across close peers, Temenos trades at a noticeable discount. This suggests investors are not fully pricing its recent profit acceleration or strong net margin improvement.

See what the numbers say about this price — find out in our valuation breakdown.

Result: Price-to-Earnings of 21.3x (UNDERVALUED)

However, slowing net income growth and a share price already above analyst targets could quickly unwind optimism if execution or banking IT budgets disappoint.

Find out about the key risks to this Temenos narrative.

Another Take on Value

While Temenos looks inexpensive on earnings, our DCF model tells a different story, with the shares trading a little above its CHF 75.27 fair value estimate. That points to slight overvaluation today and raises the issue of whether recent momentum has already pulled future returns forward.

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Temenos for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 913 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Temenos Narrative

If you see the numbers differently or want to stress test your own thesis, you can build a personalized view in just minutes, Do it your way.

A great starting point for your Temenos research is our analysis highlighting 3 key rewards and 4 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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