Should Investors Reconsider Yext After Shares Surge 35% in 2025?

Trying to decide what to do with Yext stock right now? You are definitely not alone. With its recent closing price at $8.83, Yext has caught the attention of investors curious about the next chapter for this digital business solutions firm. Over the past year, shares are up a striking 37.3%, and the year-to-date performance is even more impressive at 35.0%. Looking further back, the stock nearly doubled with a 97.5% increase over three years, but it remains down 42.7% over five years. This creates mixed sentiment among long-term investors.

Short-term moves have been less dramatic, with the last week up 1.1% and the last month slipping by 1.6%. These swings have generally mirrored broader tech sector optimism, as investors reassess growth companies in light of evolving digital advertising trends. While there is no major news directly impacting this month’s fluctuation, the long-term narrative has shifted somewhat as markets readjust their risk appetite and look for resilience in companies like Yext that are building out their digital service ecosystems.

Of course, past price moves are only half the story, and if you are weighing what to do next, valuation matters. How undervalued is Yext today? On a six-check scale, Yext scores a 2, which means the company appears undervalued in two areas out of six based on standard measures. So, what do those checks actually look at? Let us break down the different ways investors measure value, and at the end, you will see why there might be an even smarter way to tell if Yext is truly worth a closer look.

Yext scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Yext Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates the intrinsic value of a company by projecting its future cash flows and then discounting those amounts back to their value today. Essentially, this approach asks what all of Yext's expected future free cash flows are worth in today's dollars.

For Yext, the most recent annual free cash flow stands at $65.71 million. Analyst estimates and model projections see this number growing over the coming years, with projected free cash flow reaching $110 million by 2030. The DCF model used here follows a two-stage approach, relying first on analyst forecasts through 2027, then transitioning to Simply Wall St's longer-term growth extrapolations.

After applying appropriate discount rates, the model calculates an estimated intrinsic fair value of $13.35 per share. Compared to Yext's recent closing price of $8.83, this suggests the stock is trading at a 33.9% discount to its intrinsic value.

In short, the DCF analysis indicates Yext is notably undervalued at current levels, giving investors a potential margin of safety.

Result: UNDERVALUED

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

Our Discounted Cash Flow (DCF) analysis suggests Yext is undervalued by 33.9%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Yext Price vs Earnings

The price-to-earnings (PE) ratio is often the go-to valuation metric for profitable companies because it ties a company’s current stock price to its recent earnings. For businesses like Yext that are generating positive earnings, this approach helps investors put those results into perspective relative to other options in the market.

It is important to note that what counts as a “normal” or “fair” PE ratio can vary. Companies expected to grow rapidly, or those in industries with lower risk profiles, usually deserve higher PE multiples. Conversely, companies facing headwinds or higher risk will often see lower PE ratios.

Yext currently trades at a PE ratio of 146.1x. This is well above both the software industry average of 36.6x and the average for its peers, which stands at 62.9x. At first glance, this makes Yext look expensive compared to the broader sector and those it directly competes with.

However, Simply Wall St’s proprietary “Fair Ratio” analysis dives deeper than simplistic averages. The Fair Ratio takes into account not only expected earnings growth but also risk factors, profit margins, industry trends, and the company’s market capitalization. This makes it a more nuanced and reliable benchmark for assessing valuation.

For Yext, the Fair Ratio is calculated at 39.7x. Because the company’s actual PE ratio is substantially higher than this fair level, this suggests the stock is trading at a considerable premium to what fundamentals would imply.

Result: OVERVALUED

PE 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 Yext Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives. In simple terms, a Narrative is your personalized story about a company. It is a way to combine your outlook on Yext’s future business, estimates for revenue and profit margins, and what you believe the stock is really worth, all grounded in actual numbers.

A Narrative connects what is happening in Yext’s business with a dynamic financial forecast and then calculates a fair value based on your assumptions. Narratives are both easy and accessible for everyone, and you can create or explore them on Simply Wall St’s Community page, where millions of investors share perspectives on thousands of companies.

This tool helps you make decisions about when to buy or sell by comparing your own view of Fair Value to today’s Price. As new earnings or news arrives, these Narratives update automatically so you always have a clear and current picture. For example, some Yext investors are optimistic, believing the company is positioned for long-term growth and setting their fair value near $10.00. More cautious investors point to industry risks and value it closer to $8.25.

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