Sopra Steria (ENXTPA:SOP): Reassessing Valuation After Recent Share Price Weakness

Sopra Steria Group (ENXTPA:SOP) has slipped over the past 3 months, even as revenue and net income continue to grow, so investors are asking whether the current share price undervalues its digital services franchise.

See our latest analysis for Sopra Steria Group.

Despite steady revenue and earnings growth, Sopra Steria’s 90 day share price return of negative 14.55 percent and year to date share price return of negative 21.99 percent suggest momentum has cooled. However, the 5 year total shareholder return of 13.68 percent still points to longer term value creation.

If this shift in sentiment has you reconsidering your options, it might be worth exploring high growth tech and AI stocks for other digital and software names with stronger recent momentum.

With shares down despite solid top line and earnings growth, along with a sizeable gap to analyst targets, is Sopra Steria quietly trading at a discount or signaling that the market already sees its best growth as fully priced in?

Most Popular Narrative Narrative: 34.8% Undervalued

With Sopra Steria last closing at €131.6 against a narrative fair value of €201.9, the storyline points to a sizable valuation gap driven by future execution.

Ongoing progress in operating model transformation, working capital improvement (DSO reduction), and strategic M&A in high-value verticals (defense, financial services, aerospace) should enhance operational leverage, boost free cash flow conversion, and lift net margins over the medium term.

Read the complete narrative.

Want to see how modest growth assumptions, firmer margins, and a re rated earnings multiple combine into that higher fair value line? The full narrative unpacks the math behind this bullish gap.

Result: Fair Value of €201.9 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, persistent revenue softness in core European markets and ongoing pressure on margins from higher staff costs could still challenge that view of the stock as undervalued.

Find out about the key risks to this Sopra Steria Group narrative.

Build Your Own Sopra Steria Group Narrative

If you see the story differently, or want to dive into the numbers yourself, you can build a bespoke view in just a few minutes: Do it your way

A great starting point for your Sopra Steria Group research is our analysis highlighting 3 key rewards and 1 important warning sign 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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