Verra Mobility (VRRM): Revisiting Valuation After $963 Million New York Traffic Enforcement Contract

Verra Mobility (VRRM) just locked in a five year, $963 million deal with New York City, expanding automated traffic enforcement across hundreds of intersections, and the contract is already reshaping how investors think about its recurring revenue.

See our latest analysis for Verra Mobility.

Despite that backdrop and an upcoming appearance at a major technology and AI conference, Verra Mobility’s recent 1 month share price return of negative 6.66 percent has weighed on sentiment. At the same time, its 5 year total shareholder return of 59.08 percent shows the longer term compounding story is still intact, and momentum now looks poised to rebuild if this New York contract delivers as expected.

If this deal has you thinking more broadly about recurring revenue and infrastructure style plays, it could be a good time to explore fast growing stocks with high insider ownership for other compelling ideas.

With shares still more than 30 percent below analyst targets even after years of solid growth, the key debate now is simple: Is Verra Mobility quietly undervalued, or is the market already discounting its next leg of expansion?

Most Popular Narrative Narrative: 28.1% Undervalued

With Verra Mobility last closing at $21.46 against a narrative fair value of $29.83, the story leans toward a sizable upside if the projections play out.

Analysts expect the number of shares outstanding to decline by 3.19% per year for the next 3 years.

To value all of this in today's terms, we will use a discount rate of 7.49%, as per the Simply Wall St company report.

Read the complete narrative.

It raises questions about what kind of revenue climb, margin reset, and earnings surge could justify that gap, and how a lower future multiple might still support it. Investors may wish to understand the full blueprint behind that valuation change.

Result: Fair Value of $29.83 (UNDERVALUED)

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

However, concentration in New York City and margin drag from heavy upfront investments mean that any contract hiccup or delay in profitability could quickly challenge that upside.

Find out about the key risks to this Verra Mobility narrative.

Another View: Rich on Earnings

On earnings, the picture flips. Verra Mobility trades on a price to earnings ratio of 67 times, far above the US Professional Services average of 24.8 times, the peer average of 18.5 times, and even its own 31.5 times fair ratio. This suggests meaningful valuation risk if growth stumbles.

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

Build Your Own Verra Mobility Narrative

If you see the story differently, or want to dig into the numbers yourself, you can build a custom narrative in just a few minutes: Do it your way.

A great starting point for your Verra Mobility research is our analysis highlighting 3 key rewards and 3 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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