SPS Commerce (SPSC): Assessing Valuation After Sharp 20% Weekly Decline

SPS Commerce (SPSC) has seen its stock trend lower over the past month, slipping alongside other software companies. Investors are watching closely to see if recent performance signals a shift in sentiment or a longer-term value opportunity.

See our latest analysis for SPS Commerce.

SPS Commerce’s share price has taken a sharp hit lately, falling more than 20% over the past week and bringing its year-to-date share price return to -55.01%. This extended slide has weighed on longer-term total shareholder returns as well. This suggests that investor confidence is under pressure even as the broader software sector faces similar headwinds.

If you're searching for fresh ideas amid market volatility, it's worth checking out See the full list for free.

With the price now well below analyst targets and trading at a notable discount, is there a bargain hiding in plain sight? Or is the market already factoring in all the future growth that SPS Commerce can deliver?

Most Popular Narrative: 42% Undervalued

The dominant narrative estimates SPS Commerce’s intrinsic value at $142.27, a substantial premium to its last close of $82.24. This valuation reflects optimism about future earnings and margins, driven by recurring revenue strength and operational performance.

Operational investments in onboarding automation and customer delivery efficiency, including application of generative AI, are driving margin expansion. Management is guiding for continued adjusted EBITDA margin improvement of 2 percentage points annually through improved gross margin and operating leverage.

Read the complete narrative.

Curious what bold financial assumptions are powering this high valuation? Discover how projected growth, margin resilience, and future profit multiples create a compelling forecast that defies weak near-term returns. The full narrative breaks down which metric could move the needle most.

Result: Fair Value of $142.27 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, ongoing economic uncertainty and cautious spending by U.S.-based suppliers could put near-term growth expectations for SPS Commerce at risk.

Find out about the key risks to this SPS Commerce narrative.

Build Your Own SPS Commerce Narrative

If you see things differently or would rather dive into the numbers on your own, you can put together your own narrative in just a few minutes: Do it your way

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

Looking for More Smart Investment Moves?

Open new doors and get ahead by using the Simply Wall Street Screener to pinpoint stocks aligning with your unique strategy. There are always exciting opportunities waiting to be found.

• Start building your passive income stream and access reliable yields by checking out these 22 dividend stocks with yields > 3% delivering consistent returns even in turbulent markets.
• Tap into the hottest growth trend by targeting these 26 AI penny stocks pushing the boundaries of artificial intelligence and automation across industries worldwide.
• Capitalize on tomorrow’s big winners with these 840 undervalued stocks based on cash flows trading below intrinsic value, primed for rebounds that savvy investors catch early.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com