Does the Recent ISS Stock Rally Present a Compelling Opportunity in 2025?

Thinking about what to do with ISS stock? You are not alone. With so much noise in the market, deciding when to buy, hold, or move on can feel daunting. But here is the thing: ISS has shown some remarkably strong moves over the short and long term that are hard to ignore for any investor looking for growth or value. Just over the past week, the stock climbed 7.9%, and it is up 4.9% in the last month. If you widen the lens, those numbers get even more compelling, with a 52.1% surge year-to-date, a 61.1% gain over the last year, and a staggering 135.7% increase in the past five years.

What is behind this resilience and growth? Aside from day-to-day headlines, ISS has benefited from broader market trends in its sector, as investors rotate into companies showing real momentum and solid fundamentals. The market is clearly seeing potential here, but is the stock actually undervalued? This remains a question even with these recent gains.

To put some numbers to the story, ISS currently scores a 4 out of 6 when it comes to key valuation checks for undervaluation. That is a strong showing, and it is definitely worth digging into what those checks actually measure and what they tell us about ISS right now. Next, we will walk through each of the main valuation approaches analysts use for ISS stock. Keep an eye out for the final section, where we will cover an even better way to get a true read on value.

ISS delivered 61.1% returns over the last year. See how this stacks up to the rest of the Commercial Services industry.

Approach 1: ISS Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) approach estimates the intrinsic value of a company by projecting its future cash flows and discounting them back to their present value. This model is widely used by analysts as it focuses on the cash a business is expected to generate for its shareholders, offering a direct view of value creation over time.

For ISS, analysts calculate the DCF using a 2 Stage Free Cash Flow to Equity model in Danish kroner (DKK). Currently, ISS reported trailing twelve-month free cash flow of DKK 3.46 billion. Looking ahead, cash flows are forecasted to fluctuate, with projections of around DKK 2.94 billion by the year 2028 and estimates extending out to 2035 through analyst insights and data extrapolation. These projections reflect both conservative and optimistic industry expectations, providing an overview of continued robust cash generation in the coming decade.

Based on these DCF projections, the estimated intrinsic value for ISS is DKK 374.24 per share. This analysis indicates the stock is trading at a substantial 45.9% discount to its calculated fair value. This suggests ISS stock is currently undervalued relative to what its future cash flows imply it is worth.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for ISS.

Our Discounted Cash Flow (DCF) analysis suggests ISS is undervalued by 45.9%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: ISS Price vs Earnings (PE)

The Price-to-Earnings (PE) ratio is a commonly used valuation tool, especially for companies that are profitable and have a consistent earnings record like ISS. The PE ratio essentially tells investors how much they are paying for every unit of earnings generated by the company. It is a useful metric because it connects the company’s performance today with what investors are willing to pay for its potential tomorrow.

What constitutes a “fair” PE ratio depends on a variety of factors. Higher growth expectations and lower risk typically justify a higher PE, while companies with slower growth or higher risk often see their multiples reduced by the market. Market peers and the broader industry average also provide useful context, but individual company factors are just as important.

Right now, ISS trades at a PE ratio of 12.4x. Compared to the Commercial Services industry average of 17.3x and the peer average of 24.5x, ISS looks like a value stock on the surface. However, to get a more tailored view, Simply Wall St calculates a Fair Ratio, which considers ISS’s specific growth outlook, profitability, risk profile, and even its size in the market. This "Fair Ratio" goes beyond the surface-level comparison by incorporating deeper fundamentals, making it a stronger benchmark than just using the industry average or peer multiples alone.

In ISS’s case, the current PE ratio sits very close to its Fair Ratio, suggesting the market has priced the shares about right relative to expected performance and risks.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your ISS Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives. A Narrative is your personal take on a company’s story, where you connect your outlook, such as growth drivers, risks, or future prospects, to key financial estimates like future revenue, profit margins, and, ultimately, fair value.

On Simply Wall St’s Community page, millions of investors are already using Narratives to bridge the gap between numbers and the real-world stories shaping a stock. Narratives make it easy to bring your own perspective into the analysis, and they automatically update whenever fresh news or earnings data appears. This way, your view stays current without the hassle.

They are especially powerful for decision making because you can directly compare your Fair Value, based on your Narrative, to the current Price and see if it is time to buy or sell. For example, on ISS, some investors set very bullish Narratives reflecting aggressive recovery and place fair value above DKK 400 per share, while others take a more cautious approach and estimate values closer to DKK 340. Narratives allow you to invest with clarity, confidence, and your own logic.

Do you think there's more to the story for ISS? Create your own Narrative to let the Community know!

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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