Is WNS (Holdings) (NYSE:WNS) Undervalued? A Fresh Look at Its Current Valuation

WNS (Holdings) (NYSE:WNS) has seen some eye-catching moves lately, and investors might be wondering what lies beneath the surface. While there has not been a headline-grabbing event responsible for the latest changes, the ongoing movement in WNS’s stock price could be a subtle signal. This raises new questions about how the company is being valued and what the market might be expecting from this global business process management leader.

If we zoom out, WNS (Holdings) has experienced a year of gains that stand out against a mixed broader landscape. The company’s shares are up 36% over the past year, and momentum has picked up recently, up nearly 29% over the past three months, to a closing price of $75.68. These moves follow a three-year period of mild underperformance and come on the heels of consistent single-digit revenue and net income growth. Recent months have clearly brought a shift in market attitude, hinting at a renewed belief in WNS’s growth story.

After this latest stretch, the big question is whether WNS (Holdings) is now undervalued or if the market has already priced in every bit of its future growth. What do you think?

Most Popular Narrative: 14.5% Undervalued

According to rynetmaxwell, the popular narrative points to WNS trading significantly below its fair value, suggesting the market might be overlooking key strengths in the business. This perspective sees room for price appreciation if company trends hold steady.

“Maintain gross and operating margins at or above 31% and 12% respectively over the next 2-3 years. Adjust for impairment write downs and don’t worry about revenue growth. Begin expanding margins in fiscal years 2027+ after adjusting to an automated world. This will drive growth in earnings assuming revenues at least remain constant.”

Why do some see so much upside? This narrative hinges on robust margins and future margin expansion. But there are bold assumptions about automation and profitability that challenge conventional thinking. Find out what could make WNS’s valuation stand out from the crowd and why these margin forecasts might surprise even seasoned investors.

Result: Fair Value of $88.48 (UNDERVALUED)

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

However, risks such as rising wages in key markets or rapid advances in automation could challenge WNS’s margin story and long-term profitability.

Find out about the key risks to this WNS (Holdings) narrative.

Another View: Discounted Cash Flow Perspective

Taking a different approach, our SWS DCF model also points to WNS trading below its calculated fair value. This reinforces the earlier case for undervaluation. But does this consensus reveal an overlooked gem, or is something still missing?

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 WNS (Holdings) 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 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 WNS (Holdings) Narrative

If you think there’s more to this story or want to dig into the details yourself, you can build your own narrative and conclusions in just a few minutes. Do it your way

A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding WNS (Holdings).

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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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