SailPoint (SAIL): Reassessing Valuation After a Quiet Share Price Rebound

SailPoint (SAIL) shares have quietly climbed about 6% over the past week and month, even as year to date performance remains slightly negative, inviting a closer look at what investors might be pricing in.

See our latest analysis for SailPoint.

That recent 1 day share price return of 5.73% at a $21.02 share price follows a steady 7 day and 30 day share price rebound, even though the year to date share price return remains modestly negative. This suggests sentiment is improving from a soft base.

If SailPoint’s move has you watching cybersecurity and infrastructure names more closely, it could be a good moment to explore high growth tech and AI stocks for other potential opportunities riding similar themes.

With shares still down year to date but trading nearly 28% below analyst targets, investors now face a key question: Is SailPoint a misunderstood value in identity security, or already a fair reflection of its future growth?

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

On a price-to-sales ratio of 11.6 times and a last close of $21.02, SailPoint screens as clearly more expensive than many software peers.

The price-to-sales multiple compares a company’s market value to its revenue. It is a common yardstick for fast growing, often unprofitable, software and cloud businesses where earnings are not yet a reliable guide.

In SailPoint’s case, the market is assigning a premium valuation despite the company being loss making and expected to remain unprofitable over the next three years. This implies investors are paying up heavily for future revenue growth and market positioning rather than near term profitability.

That premium stands out when set against both the wider US Software industry and the model derived fair ratio. SailPoint’s 11.6 times multiple is more than double the industry’s roughly 5 times average and significantly above an estimated fair price to sales level of about 6.6 times that our regression based work suggests the market could eventually gravitate toward.

Explore the SWS fair ratio for SailPoint

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

However, SailPoint remains loss making and deeply below intrinsic value estimates, so slower growth or weaker demand could quickly challenge today’s premium narrative.

Find out about the key risks to this SailPoint narrative.

Another View: DCF Paints an Even Starker Picture

Our DCF model suggests SailPoint’s fair value is closer to $11.70 per share, well below the current $21.02 price. That implies the stock could be materially overvalued, even more than the rich sales multiple hints. Are investors leaning too hard on the growth story?

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 904 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 you see the story differently or want to dig into the numbers yourself, you can craft a personalized SailPoint narrative in just a few 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.

Ready for your next investing move?

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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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