Is It Time To Reassess BILL Holdings (BILL) After Its Recent Share Price Rebound

• If you are wondering whether BILL Holdings at around US$45.13 is priced for a recovery or still facing skepticism, you are in the right place to unpack what that means for value.
• The stock has recorded a 3.6% gain over the last 7 days and a 21.8% return over the past month, even though the year to date return is a 10.7% decline and the 1 year return is a 5.3% decline, while the 3 year and 5 year returns stand at 43.8% and 70.9% declines respectively.
• Recent coverage has focused on BILL Holdings as investors reassess the stock after a long stretch of weak multi year returns and a more positive short term move. This mix of shorter term gains and longer term declines has put the spotlight on what the current share price really reflects about the business.
• On Simply Wall St's valuation checks, BILL Holdings scores 5 out of 6, which suggests there is plenty to unpack using different valuation approaches, and we will also look at a way to tie all those methods together more clearly by the end of the article.

BILL Holdings delivered -5.3% returns over the last year. See how this stacks up to the rest of the Software industry.

Approach 1: BILL Holdings Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model estimates what a business could be worth today by projecting its future cash flows and then discounting those back to a present value. It is essentially asking what those future dollars are worth in today’s terms.

For BILL Holdings, the model uses a 2 Stage Free Cash Flow to Equity approach and starts with last twelve months free cash flow of about $344.9 million. Analyst inputs and Simply Wall St extrapolations then project free cash flow reaching $772 million by 2030, with a series of annual forecasts between 2026 and 2035 that are discounted back to today.

When all those discounted cash flows are added up, the DCF model points to an estimated intrinsic value of around $125.78 per share. Compared with a current share price of about $45.13, this indicates the shares are trading at a 64.1% discount to that intrinsic value, based on this cash flow based model.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests BILL Holdings is undervalued by 64.1%. Track this in your watchlist or portfolio, or discover 47 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 BILL Holdings.

Approach 2: BILL Holdings Price vs Sales

For BILL Holdings, the preferred valuation yardstick is the Price to Sales (P/S) ratio, which can be useful for companies where earnings do not yet give a clear picture of the business but revenue is more established. Investors usually look for a P/S level that reflects both how quickly a company is expected to grow and how much risk they are taking on to own the stock.

BILL Holdings currently trades on a P/S of 2.88x. That sits below the broader Software industry average of about 3.56x and also below the peer group average of roughly 4.53x. Simply Wall St also calculates a proprietary “Fair Ratio” for P/S, which is 5.45x for BILL Holdings. This Fair Ratio is designed to be more tailored than a simple comparison with peers, as it incorporates factors such as the company’s earnings growth profile, its industry, profit margins, market cap and risk characteristics.

Because the Fair Ratio of 5.45x is higher than the current P/S of 2.88x, this framework suggests that, on a sales based multiple, the shares look undervalued relative to what those fundamentals might justify.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your BILL Holdings Narrative

Earlier we mentioned that there is an even better way to understand valuation. Let us introduce you to Narratives, where you set out your story for BILL Holdings, link that story to your own revenue, earnings and margin estimates, and see the Fair Value that results. You can then compare that Fair Value with today’s price to help decide whether to buy, hold or sell.

On Simply Wall St’s Community page, millions of investors already use Narratives as a simple tool that connects their view of the business to a forecast and then to a Fair Value that automatically refreshes when new earnings, news or guidance is added to the platform.

For example, one BILL Holdings Narrative currently uses a Fair Value of about US$78.44 and views the shares through a more optimistic lens. Another uses a Fair Value of US$42.00 and builds in more cautious assumptions. Seeing both side by side can help you decide which story feels closer to your own view of the company.

For BILL Holdings, here are previews of two leading BILL Holdings narratives:

🐂 BILL Holdings Bull Case

Fair Value: US$78.44

Implied discount to this Fair Value: 42.5% relative to the recent price of about US$45.13

Assumed revenue growth: 18.0% per year

• Analysts in this camp tie their view to AI enabled workflow tools, new platform features and embedded partnerships that they expect to support higher margin subscription revenue and a richer mix of transaction income over time.
• They model revenue rising to about US$2.4b and earnings of US$207.7m by around 2028, with profit margins lifting from 1.6% to 8.6% and the shares trading on a future P/E of 49.0x, discounted back using a 9.4% to 9.7% range.
• They also factor in the current discussion around possible private equity interest, updated price targets around US$78 and scenarios where a buyer might pay a takeover price that sits not too far from those blended targets.

🐻 BILL Holdings Bear Case

Fair Value: US$42.00

Implied premium to this Fair Value: 7.5% relative to the recent price of about US$45.13

Assumed revenue growth: 11.8% per year

• The cautious camp focuses on risks that AI and automation could make parts of digital finance more commoditized, combined with regulation, tougher macro trends and competition that could weigh on BILL Holdings pricing power, margins and growth durability.
• They work with revenue reaching about US$2.0b and earnings of US$261.5m by around 2028, apply a lower 20.3x future P/E, and use a discount rate of roughly 9.5%, which feeds through to a Fair Value of US$42.00 after recent trims to their target.
• In this view, recent talk of potential takeovers up to US$70 per share is treated as an upside scenario rather than a base case, with more weight placed on execution risk, churn, fee pressure and the possibility that current market expectations sit too high.

Seeing both narratives side by side gives you a clear range of what other investors think the stock might be worth and why, so you can benchmark your own expectations for growth, margins and any potential deal outcomes against these structured cases.

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

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