Has The Slide In Procore Technologies (PCOR) Opened A Better Long Term Entry Point?

• Wondering if Procore Technologies at around US$42.20 still lines up with what you think it is worth, or if the recent weakness has opened up a better entry point.
• The stock is down 16.8% over the past week, 12.2% over the past month, and 39.7% year to date, with a 35.4% decline over the last year and 37.9% and 50.3% falls over the past three and five years.
• Recent coverage has focused on Procore Technologies as a construction software platform and how sentiment around growth software stocks has been shifting. This has kept attention on valuations, profitability paths, and competitive positioning. These themes help frame why the share price has been under pressure and why investors are rechecking what they are willing to pay for future cash flows.
• On Simply Wall St's 6 point valuation checklist, Procore Technologies scores a 5. The rest of this article will walk through what different valuation approaches say about the stock and finish with a framework that can help you judge value more clearly.

Find out why Procore Technologies's -35.4% return over the last year is lagging behind its peers.

Approach 1: Procore Technologies Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model takes expected future cash flows, discounts them back to today using a required rate of return, and sums them to estimate what the business might be worth right now.

For Procore Technologies, the model used is a 2 Stage Free Cash Flow to Equity approach based on cash flow projections. The latest twelve month free cash flow is about $199.4 million. Analyst and extrapolated estimates used in the model project free cash flow reaching $639.7 million by 2030, with intermediate annual figures between 2026 and 2035 all below $1 billion and expressed in millions of dollars.

Pulling those projected cash flows together, Simply Wall St’s DCF output points to an estimated intrinsic value of $81.28 per share. Compared with a current share price of around $42.20, this implies the stock is trading at a 48.1% discount to this model’s estimate of value, which suggests the shares are undervalued on these assumptions.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Procore Technologies is undervalued by 48.1%. Track this in your watchlist or portfolio, or discover 46 more high quality undervalued stocks.

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

Approach 2: Procore Technologies Price vs Sales

For many software companies that are not yet focused on bottom line earnings, the Price to Sales, or P/S, ratio is often more practical than P/E because it compares the company’s market value with the revenue it is already generating. Investors usually accept a higher P/S when they expect stronger revenue growth or lower business risk, and a lower P/S when growth expectations or confidence are weaker.

Procore Technologies currently trades on a P/S of 4.64x. This sits above the broader Software industry average of 3.41x, but below the peer group average of 5.84x. Simply Wall St’s Fair Ratio for Procore Technologies is 5.52x. This is the P/S level that its model suggests could be reasonable given factors such as the company’s growth profile, profit margins, industry, market cap and risk characteristics.

The Fair Ratio can be more useful than a simple peer or industry comparison because it adjusts for those company specific features that can skew basic multiples. Comparing the Fair Ratio of 5.52x with the current P/S of 4.64x indicates that Procore Technologies is trading below that model-based reference point on this measure.

Result: UNDERVALUED

P/S ratios tell one story, but what if the real opportunity lies elsewhere? Start investing in legacies, not executives. Discover our 20 top founder-led companies.

Upgrade Your Decision Making: Choose your Procore Technologies Narrative

Earlier it was mentioned that there is an even better way to understand valuation. Narratives on Simply Wall St let you attach a clear story to your numbers by linking your view of Procore Technologies, your revenue, earnings and margin assumptions, and your fair value into a single forecast that you can compare with the current share price. This can help you decide if you see the stock as attractive or expensive. Each Narrative updates automatically as new earnings or news arrives and can result in very different fair values, such as around US$95.00 at the bullish end and about US$55.00 at the cautious end. Both of these are visible on the Community page used by millions of investors.

Do you think there's more to the story for Procore Technologies? 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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