Assessing Netskope (NTSK) Valuation After Its First Earnings Report as a Public Company

Netskope (NTSK) just delivered its first earnings report as a public company, and it was a mixed bag that immediately put the stock in the spotlight for growth focused investors.

See our latest analysis for Netskope.

The muted reaction to Netskope’s inaugural report comes after a choppy stretch, with a 1 day share price return of minus 8.06 percent and year to date share price return of minus 15.3 percent, suggesting momentum has cooled even as growth expectations stay elevated.

If this earnings wobble has you comparing stories across cybersecurity and cloud, it could be a smart time to scan other high growth tech names through high growth tech and AI stocks.

With the stock now trading at a steep discount to Wall Street targets even as losses widen and growth stays strong, investors face a key question: Is Netskope undervalued here, or is future upside already priced in?

Price to Sales of 11.3x: Is it justified?

Netskope’s latest close of $19.05 implies a rich valuation, with the stock trading on an 11.3x price to sales multiple that screens as expensive versus peers.

The price to sales ratio compares the company’s market value to its annual revenue, a common yardstick for fast growing, loss making software and cybersecurity names where earnings are still negative.

In Netskope’s case, that 11.3x price to sales figure sits well above both the US Software industry average of 4.9x and a peer group average of 8.7x. This signals that investors are paying a premium for its rapid, more than 20 percent forecast revenue growth even though the business is expected to remain unprofitable for at least the next three years.

That premium is stark. Netskope’s multiple is more than double the broader software sector and notably higher than similar peers, suggesting the current share price already bakes in strong execution and sustained growth without a clear line of sight to profitability.

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

Result: Price to Sales of 11.3x (OVERVALUED)

However, steep ongoing losses and any slowdown in Netskope’s 21 percent revenue growth could quickly narrow today’s apparent discount to analyst targets.

Find out about the key risks to this Netskope narrative.

Another View from Our DCF Model

Our DCF model paints a very different picture, putting Netskope’s fair value closer to $7.04 per share, which suggests the current $19.05 price is meaningfully overvalued despite the fast growth story. If both methods flag rich pricing, what exactly is the market betting on?

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 Netskope 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 908 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 Netskope Narrative

If you see the story differently or want to stress test the numbers yourself, you can build a fresh view in minutes: Do it your way.

A great starting point for your Netskope research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

Ready for your next investing move?

Put your Netskope insights to work and move quickly on other opportunities, or risk watching tomorrow’s winners pass you by while you stay on the sidelines.

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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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