Is TaskUs Set for a Rebound After New Outsourcing Partnership and Price Drop?

• Wondering if TaskUs is undervalued or ready for its next move? You are not alone, as plenty of investors are looking for signals beneath the recent headlines.
• The stock rose 3.7% in the last week, but has slipped by 20.5% over the past month and is down 32.7% year-to-date. These figures suggest shifting sentiment and risk perceptions around the business.
• Recently, TaskUs captured attention when it announced a new outsourcing partnership with a major client. This development has piqued renewed interest among tech-focused investors. Market reactions to news about operational expansions and contract wins have caused notable swings, as confidence in the company’s long-term prospects is re-evaluated.
• Based on our calculations, TaskUs scores a solid 6 out of 6 on our valuation scorecard. This means the company is undervalued on every check we use. Next, we will walk through how those values are determined using different methods, and at the end, share a potentially smarter way to understand what the numbers mean.

Find out why TaskUs's -24.1% return over the last year is lagging behind its peers.

Approach 1: TaskUs Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates what a company is worth by forecasting its future cash flows and then discounting those amounts back to their present value. This approach gives investors an idea of a business's intrinsic value based on its ability to generate cash over time.

For TaskUs, the current Free Cash Flow stands at $102.3 million. Analysts provide estimates for the next several years, projecting that Free Cash Flow will increase to $137 million by the end of 2027. Further out, Simply Wall St extrapolates these projections, forecasting Free Cash Flow to grow to approximately $217.1 million by 2035. These projections suggest steady, long-term growth in operating cash generation, using a two-stage Free Cash Flow to Equity model.

The result of the DCF model is a fair value estimate of $38.86 per share. Compared to its recent trading price, this valuation implies TaskUs is trading at a 70.7% discount to its intrinsic value, which may indicate that the stock is significantly undervalued based on projected cash generation.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests TaskUs is undervalued by 70.7%. Track this in your watchlist or portfolio, or discover 926 more undervalued stocks based on cash flows.

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

Approach 2: TaskUs Price vs Earnings (PE) Analysis

The price-to-earnings (PE) ratio stands out as a widely used valuation metric for profitable companies, making it especially suitable for TaskUs. Since the PE ratio relates a company’s market price to its earnings, it offers a quick gauge of how much investors are willing to pay for each dollar of profit generated by the business.

What constitutes a “normal” or “fair” PE ratio often depends on growth expectations and risk. Faster growing companies or those with more stable earnings typically command higher PE ratios, while firms facing uncertain outlooks or greater risks may trade at lower multiples.

Currently, TaskUs is valued at a PE ratio of 12.6x. This compares favorably to the Professional Services industry average of 24.3x and the peer group average of 28.1x, both of which are considerably higher. At first glance, this deep discount could signal undervaluation; however, it is important to look further.

Simply Wall St’s proprietary “Fair Ratio” provides an even clearer perspective. This Fair Ratio is a more insightful benchmark because it takes into account not only the company’s expected earnings growth, profit margins, and risk profile, but also its size and place within the broader industry. For TaskUs, the Fair Ratio is calculated at 20.3x. Unlike simple comparisons to industry or peer averages, the Fair Ratio reflects a tailored expectation based on the business’s unique characteristics.

Comparing TaskUs’s current PE ratio of 12.6x with its Fair Ratio of 20.3x, the stock appears undervalued. The market is pricing TaskUs well below what would typically be expected for a company with its profile and prospects.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1434 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your TaskUs Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is a simple, structured way for investors to articulate the story and assumptions behind a company. It combines your perspective on future growth, risks, and industry shifts with specific forecasts for revenue, earnings, margins, and ultimately, fair value.

Narratives connect the dots by taking what you know about TaskUs’s market, management, and opportunities, then linking it directly to a numbers-driven forecast and fair value estimate. When you create or follow a Narrative on Simply Wall St’s Community page, trusted by millions of investors worldwide, you can immediately see whether your own or someone else’s story suggests that TaskUs is overvalued or undervalued compared to the current market price. This can make it easier to inform your decisions regarding the stock.

New information, such as earnings results or breaking news, automatically updates the figures and highlights whose Narratives are adapting fastest. For example, some investors currently have a bullish Narrative for TaskUs with a fair value estimate near $18.93, expecting strong earnings and margin improvements. Others have a more cautious outlook, estimating fair value closer to $16.62 based on slower growth assumptions and sector headwinds. Your Narrative empowers you to invest with a clear, tailored view that evolves as the story does.

Do you think there's more to the story for TaskUs? Head over to our Community to see what others are saying!

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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