Has Clearwater Analytics Rebound and New Client Wins Changed Its Investment Appeal in 2025?

• If you are wondering whether Clearwater Analytics Holdings at around $21.96 is a bargain or a value trap, you are in the right place to unpack what the market is really pricing in.
• The share price has crept up about 0.7% over the last week and 6.1% over the past month, even though it is still down roughly 19.3% year to date and 23.5% over the last year, which hints at improving sentiment after a rough stretch.
• Recent headlines have focused on Clearwater expanding its footprint with new enterprise wins and deepening partnerships in the investment management space, reinforcing its reputation as a go to platform for complex asset reporting. This mix of long term growth narratives and renewed client momentum helps explain why the stock has started to stabilize after its slide.
• On our valuation checks, Clearwater scores a 4 out of 6, suggesting it screens as undervalued on several but not all metrics. Next we will break down what different valuation methods say about the stock, before finishing with a more holistic way to think about its true worth.

Find out why Clearwater Analytics Holdings's -23.5% return over the last year is lagging behind its peers.

Approach 1: Clearwater Analytics Holdings Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow model estimates what a business is worth by projecting its future cash flows and discounting them back to today in dollar terms. For Clearwater Analytics Holdings, the latest twelve month Free Cash Flow is about $81.7 million, which analysts expect to grow rapidly over the next decade.

According to the 2 Stage Free Cash Flow to Equity model, analyst estimates take FCF to around $315 million by 2028, with further years extrapolated by Simply Wall St, rising toward roughly $497 million by 2035. These forward cash flows are discounted back to the present to arrive at an intrinsic value per share of about $21.48.

With the stock currently trading around $21.96, the DCF output implies Clearwater is roughly 2.2% overvalued, which is effectively in line with the market price and well within any reasonable margin of error for long term forecasts.

Result: ABOUT RIGHT

Clearwater Analytics Holdings is fairly valued according to our Discounted Cash Flow (DCF), but this can change at a moment's notice. Track the value in your watchlist or portfolio and be alerted on when to act.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Clearwater Analytics Holdings.

Approach 2: Clearwater Analytics Holdings Price vs Earnings

For profitable software businesses like Clearwater Analytics Holdings, the price to earnings multiple is a useful shorthand for how much investors are willing to pay today for each dollar of current profits. Higher growth and lower perceived risk usually justify a richer PE ratio, while slower growth or higher uncertainty tend to pull a “normal” or “fair” PE down.

Clearwater currently trades on about 16.1x earnings, which is well below both the broader Software industry average of roughly 31.2x and its direct peer group around 21.7x. On the surface that discount might suggest the stock is being treated cautiously despite its growth narrative. However, Simply Wall St’s proprietary Fair Ratio model, which estimates what a stock’s PE should be given its earnings growth, margins, industry, market cap and risk profile, points to a fair PE of about 24.3x for Clearwater.

This Fair Ratio is more informative than a simple comparison with peers or the sector because it adjusts for Clearwater’s specific fundamentals rather than assuming it deserves an average multiple. With the shares at 16.1x versus a Fair Ratio of 24.3x, the stock screens as notably undervalued on an earnings basis.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your Clearwater Analytics Holdings Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a simple way to connect your view of Clearwater Analytics Holdings’ story with a concrete forecast and fair value estimate. You state what you think will happen to revenue, earnings and margins. The platform then turns that into a fair value you can compare with today’s share price to help you decide whether to buy or sell. It then automatically updates that Narrative as new news or earnings arrive, all within the Simply Wall St Community page that millions of investors use. This means one investor might build a bullish Clearwater Narrative anchored on a fair value near the high analyst target of about $36, while a more cautious investor might lean toward the low end near $23. Both perspectives can coexist, be tracked over time, and be stress tested against the live market price.

Do you think there's more to the story for Clearwater Analytics Holdings? Head over to our Community to see what others are saying!

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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