RingCentral (RNG): Rethinking Valuation After High-Profile Chicago Cubs Partnership Announcement

RingCentral (RNG) just made headlines with its new partnership as the Chicago Cubs’ official cloud-based business communications provider. This deal is not only about deploying technology; it also includes high-visibility branding opportunities, such as rotational messaging on the iconic Wrigley Field Marquee and bullpen signage. For investors, such an alliance with a marquee sports franchise signals a leap in RingCentral’s efforts to break into new verticals, potentially opening doors to untapped audiences and revenue streams. Over the past year, the company’s shares have climbed 15%, a turnaround that stands out after several tougher years. Momentum has picked up again recently, with gains of 5% over the past month and 16% across the past three months. While its multi-year trajectory still reflects old headwinds from earlier declines, the pickup in momentum, paired with strong annual net income growth, adds another wrinkle to how investors might value the stock in the wake of a buzzworthy client win. With RingCentral pushing deeper into high-profile partnerships and short-term momentum building, some may wonder whether this is the beginning of a new growth story or a situation where the market has already priced in future success.

Most Popular Narrative: 3.9% Undervalued

According to the most widely followed narrative, RingCentral shares are trading at nearly a 4% discount to their fair value. Analysts believe the stock could be modestly undervalued, with expectations of improved profitability and revenue growth ahead.

“Deepening strategic partnerships with industry leaders like AT&T and the renewal of the NiCE partnership provide improved distribution and cross-sell opportunities. This expands RingCentral's addressable market and customer base across both SMB and enterprise segments, bolstering top-line revenue and lowering customer acquisition costs over time.”

What is underpinning this near double-digit upside? Analysts point to ambitious future profit margins, a return to positive earnings, and robust expansion plans. Want to see which forecasted growth rates and margin jumps are fueling this valuation, and the one figure that could redefine investor expectations? The answer might surprise even experienced tech stock watchers.

Result: Fair Value of $33.24 (UNDERVALUED)

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

However, increased competition from bundled productivity suites or a shift in key partner strategies could quickly dampen RingCentral's optimistic growth outlook.

Find out about the key risks to this RingCentral narrative.

Another View: SWS DCF Model Weighs In

Looking at the numbers from a different angle, our discounted cash flow (DCF) model suggests a far wider gap between RingCentral’s share price and its long-term intrinsic value. This result reinforces the idea that the market may be overlooking hidden upside. However, is this outlook too optimistic given the headwinds ahead?

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 RingCentral 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 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 RingCentral Narrative

If you see things differently or want to dive into the data on your own terms, it's easy to craft your perspective in just a few minutes. Do it your way

A great starting point for your RingCentral research is our analysis highlighting 4 key rewards and 1 important warning sign 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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