Is SailPoint (SAIL) Pricing Look Stretched After Recent Share Price Slide

• If you are wondering whether SailPoint is attractively priced or just a value trap, this article is here to walk you through what the current price might be telling you.
• SailPoint shares last closed at US$15.65, after a 2.6% gain over the past week, although the stock shows declines of 14.3% over 30 days, 17.4% year to date and 36.8% over the past year.
• Recent coverage around SailPoint has focused on its position in identity security software and how investors are weighing that role against broader software sector sentiment. This context helps explain why short term price moves can look quite different depending on whether the focus is on near term sentiment or longer term expectations.
• SailPoint currently has a valuation score of 1 out of 6. We will run through what that means using standard valuation approaches, then finish by looking at a more complete way to think about the company’s value that goes beyond a single score.

SailPoint scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: SailPoint Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model projects a company’s future cash flows and then discounts them back to today’s value. It aims to estimate what the whole business could be worth based on its ability to generate cash.

For SailPoint, the model used is a 2 Stage Free Cash Flow to Equity approach. The latest twelve month free cash flow is reported at $0.14 million. Analyst and extrapolated projections suggest free cash flow reaching $522.99 million in 2035, with interim estimates such as $46.12 million in 2026, $210.10 million in 2027 and $273.73 million in 2028. Simply Wall St notes that analysts only provide forecasts for the earlier years, and the later figures are extended from those assumptions.

Aggregating and discounting these projected cash flows results in an estimated intrinsic value of about $12.44 per share. Compared with the recent share price of $15.65, the model implies the stock is around 25.8% overvalued based on these cash flow assumptions.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests SailPoint may be overvalued by 25.8%. Discover 56 high quality undervalued stocks or create your own screener to find better value opportunities.

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

Approach 2: SailPoint Price vs Sales (P/S)

For a company like SailPoint, where earnings are not the main focus, the P/S ratio is often a useful way to think about valuation because it compares the share price to the revenue the business is generating.

Investors usually look for higher P/S ratios when they expect stronger growth and are comfortable with higher risk, and lower P/S ratios when growth expectations are more modest or risks are higher. So what counts as a “normal” P/S really depends on what the market believes about future revenue and the stability of the business.

SailPoint currently trades on a P/S ratio of 8.64x. That sits above the Software industry average of 3.62x and also above the peer group average of 7.73x. Simply Wall St’s Fair Ratio for SailPoint is 6.06x, which is its own estimate of what the P/S multiple could be given factors like earnings growth, industry, profit margin, market cap and risks.

This Fair Ratio goes further than a simple peer or industry comparison because it adjusts for SailPoint’s specific growth profile, risk level, profitability and size, rather than assuming all software names should trade on similar multiples.

With the current P/S ratio of 8.64x sitting above the Fair Ratio of 6.06x, SailPoint screens as overvalued on this metric.

Result: OVERVALUED

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 SailPoint Narrative

Earlier we mentioned that there is an even better way to understand valuation. Narratives on Simply Wall St give you a simple way to link your story about SailPoint to your own forecast and Fair Value, then compare that to today’s price. Each Narrative sits inside the Community page, updating as new news or earnings arrive, and capturing different viewpoints, such as a more cautious SailPoint view with a Fair Value of US$20.00 and a more optimistic one at US$26.77. This allows you to quickly see where your expectations fit and decide how you want to act when Fair Value and price are out of line.

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