Has The Pullback In Zeta Global (ZETA) Opened A Long Term Opportunity?

• If you are looking at Zeta Global Holdings and wondering whether the current share price reflects its true worth, this article is going to walk through that question in a structured way.
• The stock last closed at US$17.17, with a 3.1% decline over the past week, a 29.6% decline over the past month, a 13.8% decline year to date, but a 75.9% return over the past three years.
• Recent coverage has focused on Zeta Global Holdings as a marketing technology player in a competitive software space, which helps frame how investors think about its potential and risks. These discussions provide useful context for the recent share price moves, as attention often shifts between growth expectations, profitability and balance sheet strength.
• On our valuation checks, Zeta Global Holdings currently scores 5 out of 6. This suggests there is more to unpack when you compare different valuation methods. Later in the article we will go one step further with a framework that can help you make sense of those methods in a more practical way.

Find out why Zeta Global Holdings's -16.7% return over the last year is lagging behind its peers.

Approach 1: Zeta Global Holdings Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model estimates what a business might be worth by projecting its future cash flows and then discounting those projections back to today’s dollars. It is essentially asking what all those future $ free cash flows are worth right now.

For Zeta Global Holdings, the model used is a 2 Stage Free Cash Flow to Equity approach. The latest twelve month free cash flow is about $129.5 million. Analyst and extrapolated projections, provided out to 2035, show free cash flow figures reaching an estimated $536.2 million in ten years, with interim years ranging between about $223.9 million in 2026 and $513.4 million in 2034. Simply Wall St extends analyst estimates beyond the typical 5 year window, using its own growth assumptions.

Bringing all of those projected cash flows back to today, the DCF model arrives at an estimated intrinsic value of about $29.48 per share. Compared with the recent share price of US$17.17, this implies the shares trade at a 41.7% discount to that DCF estimate. On this model, the stock appears undervalued.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Zeta Global Holdings is undervalued by 41.7%. Track this in your watchlist or portfolio, or discover 51 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 Zeta Global Holdings.

Approach 2: Zeta Global Holdings Price vs Sales

For companies where profits are less of a focus, the P/S ratio is often a useful way to think about value, because it compares what the market is paying for each dollar of revenue rather than each dollar of earnings.

What counts as a reasonable P/S ratio depends on what investors expect for future growth and how risky they think the business is. Higher growth and lower perceived risk tend to support higher P/S multiples, while slower growth or higher uncertainty usually point to lower ones.

Zeta Global Holdings currently trades on a P/S of 3.45x. That sits slightly below the broader Software industry average of 3.84x and well below the peer average of 11.83x. Simply Wall St also calculates a proprietary “Fair Ratio” of 5.20x for Zeta Global Holdings. This is the P/S multiple it would expect given factors such as the company’s growth profile, industry, profit margins, market cap and risk characteristics.

This Fair Ratio is more tailored than a simple comparison with peers or the industry, because it adjusts for differences in fundamentals and risk rather than assuming all software businesses deserve similar multiples. Compared to this 5.20x Fair Ratio, the current 3.45x P/S suggests the shares screen as undervalued on this metric.

Result: UNDERVALUED

P/S ratios tell one story, but what if the real opportunity lies elsewhere? Start investing in legacies, not executives. Discover our 23 top founder-led companies.

Upgrade Your Decision Making: Choose your Zeta Global Holdings Narrative

Earlier we mentioned that there is an even better way to understand valuation. Let us introduce you to Narratives, which are simply your story about a company tied directly to your own forecast for revenue, earnings, margins and a fair value. All of this is wrapped into an easy tool on Simply Wall St's Community page that helps you compare that Fair Value with the current share price, and then keeps it up to date as new news or earnings arrive.

With Narratives, you can see how different investors look at the same stock in very different ways. For example, one Zeta Global Holdings Narrative currently anchors on a Fair Value near US$40.22 per share, while another is closer to US$23.00, and a third sits around US$29.67. This shows how the same data can support a more optimistic, more cautious or more middle of the road story about the company.

Do you think there's more to the story for Zeta Global 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com