Sizing Up SentinelOne After Shares Climb 3% on Broad Market Rebound

Trying to make sense of SentinelOne’s stock right now? You’re not alone. For every investor worrying about its double-digit declines this year, there's another eyeing its rebound potential and wondering if now is the moment to pounce. The cyber security sector remains as headline-driven as ever, and SentinelOne’s price chart tells a fascinating story. Over the last week, shares have ticked up 3.2%, even as the stock remains down 20.3% year-to-date. If you widen the window, the stock has seen negative returns of 28.4% over the past year and nearly 20% over the past three years. Those are tough numbers on paper, but they do not tell the full story.

What might look like a dramatic drop could actually be a change in risk appetite among investors rather than any major business stumble. The whole cyber security landscape has been evolving, and SentinelOne is in the middle of it, benefitting from ongoing demand for next-generation security solutions while navigating broader market unease about growth stocks. Looking deeper, there is something intriguing: by most valuation metrics, SentinelOne actually appears somewhat undervalued. Our valuation score, which rates companies on six different checks, shows SentinelOne gets a 5 out of 6, marking it as undervalued by most standards.

So, is the market discounting risk or missing underlying value? Let’s break down the standard valuation approaches to see what’s really happening. After covering the usual suspects, I’ll share a perspective on how to truly size up SentinelOne’s worth.

Why SentinelOne is lagging behind its peers

Approach 1: SentinelOne Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) model estimates a company's value by projecting its future cash flows and discounting them back to reflect their value today. For SentinelOne, the DCF uses a "2 Stage Free Cash Flow to Equity" approach, relying on recent and projected financial data in USD.

SentinelOne's latest reported Free Cash Flow (FCF) stands at approximately $12.3 million. Analyst projections expect strong growth over the coming years, with FCF forecast to rise to about $216 million by 2028. Looking out over a decade, further extrapolations place FCF at more than $634 million by 2035. It is worth noting that analyst estimates typically extend five years, and forecasts beyond that are based on trend analysis and market models.

Based on these projections, the model calculates SentinelOne’s intrinsic value at $22.77 per share. Compared to where the stock trades today, this figure suggests the shares are trading at a 21% discount.

With these inputs, the DCF indicates that SentinelOne is undervalued in the current market, making it an attractive watch for value-focused investors.

Result: UNDERVALUED

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

Our Discounted Cash Flow (DCF) analysis suggests SentinelOne is undervalued by 21.0%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: SentinelOne Price vs Sales

The Price-to-Sales (P/S) ratio is a widely used valuation multiple, especially for technology companies where robust earnings may still be on the horizon. For growth-focused software firms like SentinelOne, which are investing heavily to expand market share, the P/S ratio can provide meaningful insight even when profits are not yet substantial. High-growth prospects and perceived risks both play crucial roles in determining what qualifies as a "normal" or "fair" P/S ratio for a stock. Faster-growing, lower-risk companies usually command higher multiples.

SentinelOne currently trades at a P/S ratio of 6.64x. To put this in context, the average for the broader Software industry stands at 5.29x, while direct peers trade at a higher average of 8.80x. This positions SentinelOne’s valuation near the midpoint between sector and peer benchmarks.

Simply Wall St’s proprietary "Fair Ratio" refines this picture by building a company-specific expected multiple based on growth forecasts, profit margins, industry positioning, risks, and market cap. Unlike a simple industry or peer comparison, the Fair Ratio tunes directly into SentinelOne’s unique profile and business momentum, filtering out much of the generic market noise. For SentinelOne, the Fair Ratio is calculated at 7.19x, which is within half a turn of the company’s current P/S and signals that, in terms of revenue multiples, the market is valuing the stock about right.

Result: ABOUT RIGHT

PS ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your SentinelOne Narrative

Earlier, we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is essentially your story behind the numbers. It connects your view of SentinelOne’s business and industry outlook with your estimates of future revenue, earnings, and margins, and ultimately, your own fair value for the stock.

With Narratives, you move beyond static metrics by linking SentinelOne's evolving story, financial forecasts, and market events to give your investment research real context. Even better, Simply Wall St makes Narratives user-friendly and accessible in the Community page used by millions of investors, so anyone can create and share a perspective.

This approach helps you decide when to buy or sell by instantly comparing your calculated Fair Value to the current Price and by highlighting key catalysts and risks, based on your assumptions. Because Narratives update as new information (like earnings or news) comes in, your analysis always stays relevant and dynamic.

For example, some SentinelOne investors see AI-driven innovation, platform expansion, and international growth as reasons to forecast earnings at $215.8 million and assign a fair value of $30.0 per share. Others remain cautious on partner risk or profitability and set a much lower fair value of $19.0 per share. Both perspectives are captured and compared in real time via Narratives.

Do you think there's more to the story for SentinelOne? Create your own Narrative to let the Community know!

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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