A Look at Manhattan Associates’s (MANH) Valuation Following Major Pacsun POS Rollout and Operational Gains

Manhattan Associates (MANH) revealed that its Manhattan Active Point of Sale solution has gone live across over 300 Pacsun stores. The solution is transforming in-store experiences and streamlining fulfillment through integrated mobile checkout and unified inventory.

See our latest analysis for Manhattan Associates.

Despite landing significant deployments like Pacsun’s rapid adoption of Manhattan Active POS, Manhattan Associates has not been immune to this year’s market skittishness. The share price has slid by 36.6% year-to-date, and the one-year total shareholder return is down 39.2%. Still, even with recent declines, long-term holders are ahead. The three- and five-year total returns stand at 37.8% and 71.2% respectively.

If you’re curious which other fast-moving tech innovators are shaking up the space, the next logical step is to discover See the full list for free.

This raises a key question for investors. Given the company’s recent performance and still-bright prospects, are shares of Manhattan Associates undervalued, or has the market already priced in all future growth?

Price-to-Earnings of 47.6x: Is it justified?

Manhattan Associates is trading at a price-to-earnings (P/E) ratio of 47.6x, substantially higher than both its industry peers and the broader market. With a last close price of $170.49, the stock looks expensive from this perspective.

The price-to-earnings ratio measures how much investors are willing to pay for each dollar of earnings. For software companies, elevated P/E ratios often reflect expectations of robust future growth or enduring profitability. However, high P/E ratios can also indicate over-optimism if those expectations are not met.

In this case, the market is pricing Manhattan Associates as a premium software player. Its P/E of 47.6x is much higher than the US Software industry average of 29.6x and the peer average of 36.1x, as well as our estimated fair P/E ratio of 32x. This significantly higher valuation suggests investors have priced in continued outperformance. If growth slows, the premium could appear excessive when compared to sector benchmarks and intrinsic value estimates.

Explore the SWS fair ratio for Manhattan Associates

Result: Price-to-Earnings of 47.6x (OVERVALUED)

However, slowing revenue growth and market volatility remain notable risks. These factors could challenge the company’s lofty valuation and investor optimism.

Find out about the key risks to this Manhattan Associates narrative.

Another View: Discounted Cash Flow

While the current price-to-earnings ratio suggests Manhattan Associates is trading at a premium, our SWS DCF model tells a different story. According to this approach, shares trade 24.7% below our estimate of fair value. This may indicate there is more upside than the multiples suggest. Does this point to a hidden opportunity, or is the market sensing risk the numbers do not?

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 Manhattan Associates 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 928 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 Manhattan Associates Narrative

If you see things differently, or simply enjoy your own deep dive, you can construct your personal narrative using our simple process in just a few minutes, so why not Do it your way

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

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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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