Is Five9’s Recent 14.9% Rebound Justified by Its DCF and Earnings Valuations in 2025?

• Wondering if Five9 is a beaten down cloud name ready for a comeback or a value trap in the making? This breakdown will help you decide whether the current price really makes sense.
• Despite a painful longer term slide with the share price down 48.0% year to date and 50.7% over the last year, the stock has shown signs of life recently, climbing about 14.9% in the past month even after a flat 7 day move.
• That bounce has come as investors refocus on contact center AI, customer experience software spending and consolidation chatter in the broader SaaS space. All of these factors can shift how the market values a name like Five9. At the same time, ongoing competition from larger platform players and changing enterprise IT budgets keep a lid on overly optimistic sentiment.
• Right now Five9 scores just 2/6 on our valuation checks, suggesting some areas of potential value but also clear pockets of overpricing. In the sections ahead we will unpack what different valuation methods say about the stock while hinting at a more holistic way to think about its true worth by the end of the article.

Five9 scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Five9 Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model estimates what a company is worth today by projecting the cash it can generate in the future and discounting those dollars back to their present value. For Five9, the model uses a 2 stage Free Cash Flow to Equity approach built on cash flow projections.

Five9 currently generates about $132.2 million in free cash flow. Analyst estimates and extrapolations by Simply Wall St point to this rising steadily, with projected free cash flow of roughly $501.4 million in 10 years. These projections are all in $ and assume that growth is stronger in the earlier years before moderating over time.

When those future cash flows are discounted back, the DCF model arrives at an intrinsic value of about $68.40 per share, implying the stock is trading at roughly a 69.3% discount to its estimated fair value. On this cash flow view alone, Five9 appears meaningfully undervalued by the market.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Five9 is undervalued by 69.3%. Track this in your watchlist or portfolio, or discover 916 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 Five9.

Approach 2: Five9 Price vs Earnings

For profitable software companies like Five9, the price to earnings ratio is a useful shorthand for how much investors are willing to pay today for each dollar of current profit. In general, faster growth and lower perceived risk justify a higher PE multiple, while slower growth or more uncertainty point to a lower, more conservative range.

Five9 currently trades on a PE of about 52.54x, a clear premium to the wider Software industry average of roughly 31.19x and above the peer group average of around 24.95x. On those simple comparisons alone, the stock looks expensive. However, Simply Wall St also calculates a Fair Ratio, a proprietary PE multiple of about 38.25x that reflects Five9’s specific earnings growth outlook, profitability, industry positioning, market cap and risk profile.

This Fair Ratio is more tailored than a basic peer or sector comparison because it adjusts for company specific strengths and vulnerabilities rather than assuming all software names should trade on the same multiple. Measured against this 38.25x Fair Ratio, Five9’s current PE of 52.54x suggests the shares are pricing in more optimism than its fundamentals alone would warrant.

Result: OVERVALUED

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Upgrade Your Decision Making: Choose your Five9 Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a simple way to turn your view of Five9 into a story that connects its business strengths, risks and industry trends to a concrete forecast for revenue, earnings and margins, and ultimately to a personal fair value estimate you can compare with today’s share price. On Simply Wall St’s Community page, millions of investors use Narratives as an accessible tool to spell out why they think Five9 deserves, for example, a higher fair value around $59 if AI adoption, partnerships and margin expansion play out strongly, or a lower fair value closer to $28 if competitive pressure, slower growth and execution risks dominate. Each Narrative automatically updates when new earnings, news or guidance arrives so you can quickly see whether your fair value still exceeds the current price, which may suggest a potential buy, or falls below it, which may indicate that it could be time to trim or avoid the stock.

Do you think there's more to the story for Five9? 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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