Reassessing SailPoint (SAIL) Valuation After a Recent Share Price Rebound

SailPoint (SAIL) shares have quietly climbed about 12% over the past month even as three month performance remains weak, setting up an interesting reset in expectations around its identity security business.

See our latest analysis for SailPoint.

Zooming out, SailPoint’s 30 day share price return of about 12% contrasts with a still negative year to date share price return. This hints that sentiment is stabilising rather than fully turning bullish just yet.

If SailPoint’s recent move has your radar up, this could be a good moment to explore other high growth tech opportunities using our high growth tech and AI stocks.

With shares still below analyst targets despite solid double digit revenue growth, the recent bounce raises a key question: is SailPoint a misunderstood value in identity security, or is the market already pricing in its next leg of growth?

Price-to-Sales of 11.6x: Is it justified?

SailPoint’s latest close of $20.98 implies a rich valuation, with the shares trading on a price to sales ratio of 11.6 times revenue.

The price to sales multiple compares the company’s market value to its annual sales, a common yardstick for fast growing but unprofitable software names like SailPoint. At 11.6 times, investors are paying a premium today for each dollar of current revenue, effectively embedding expectations of strong future growth and eventual operating leverage into the share price.

However, that premium looks stretched when lined up against both peers and a fair value yardstick. The 11.6 times multiple sits well above the peer group average of 7.7 times and far beyond the estimated fair price to sales ratio of 7 times, suggesting the market could ultimately re rate the shares closer to that lower level if growth or profitability progress falls short.

Explore the SWS fair ratio for SailPoint

Result: Price-to-Sales of 11.6x (OVERVALUED)

However, risks remain if identity security spending slows or SailPoint struggles to translate rapid revenue growth into sustainable profitability, which could pressure today’s premium valuation.

Find out about the key risks to this SailPoint narrative.

Another Take, Our DCF View

While the price to sales ratio paints SailPoint as expensive, our DCF model is even more cautious, pointing to a fair value of about $11.92 per share, well below the current $20.98. If both signals lean negative, is the market overlooking risk or betting on a sharper growth inflection?

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 SailPoint 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 916 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 SailPoint Narrative

If this view does not quite match your own or you prefer hands on research, you can build a custom narrative in just minutes: Do it your way.

A great starting point for your SailPoint research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

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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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