Sea (NYSE:SE) Valuation in Focus Following Strong Earnings and Profit Surge

Sea (NYSE:SE) just caught investors’ attention with its latest earnings announcement, and for good reason. The company reported that both revenue and net income rose substantially for the first half of the year, with profits jumping from just over $58 million to more than $800 million compared to last year. That kind of bottom-line improvement does not go unnoticed, especially at a time when many investors are keeping a close eye on who can actually turn growth into meaningful profit. This momentum has also been reflected in Sea’s share price. Over the past year, the stock has returned 123%, and it has climbed 17% in the past month alone. This marks a notable change from some of the volatility seen in recent years. In addition to the recent earnings, management has kept the story in the spotlight with presentations at regional investor conferences, which may also be fueling optimism about Sea’s future prospects. With the stock moving higher following these results, the big question for investors is whether Sea is undervalued after years of uncertainty or if recent gains indicate that the market is already factoring in even stronger growth ahead.

Most Popular Narrative: 4.6% Undervalued

According to community narrative, Sea is currently trading at a 4.6% discount to its fair value, based on assumptions around its future earnings growth, profit margin expansion, and international business performance. This view is driven by consensus analyst forecasts and a discount rate of 8.6%.

Accelerating mobile internet adoption and rising youth digital literacy in Southeast Asia and Brazil are fueling user growth across Sea's e-commerce (Shopee), fintech (Monee), and gaming (Garena) businesses. These factors support robust double-digit revenue growth and expand the company's total addressable market for the long term.

Curious how this narrative justifies a premium valuation? The consensus hinges on powerful growth factors and ambitious profitability targets. Yet, the real story is revealed in the critical assumptions that lie beneath the headlines. Want to uncover which quantitative levers are most pivotal to this undervaluation call? Dive into the full narrative for a revealing look at the numbers that analysts believe set Sea apart.

Result: Fair Value of $194.52 (UNDERVALUED)

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

However, intensified competition and reliance on key game titles could put Sea's growth story at risk, highlighting crucial risks for investors to monitor.

Find out about the key risks to this Sea narrative.

Another View: Cutting Through the Hype

While community and analyst narratives see Sea as undervalued, our DCF model takes a more fundamental approach by projecting future cash flows. This method also points to undervaluation. But what if both methods are missing something?

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 Sea 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 Sea Narrative

If you have a different perspective or want to investigate the numbers yourself, you can quickly craft your own narrative in just a few minutes. do it your way.

A good starting point is our analysis highlighting 3 key rewards investors are optimistic about regarding Sea.

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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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