Can Radware (RDWR) Justify Its Valuation As Earnings Show Higher Sales But Softer Profit?

Radware earnings event and what it means for investors

Radware (NasdaqGS:RDWR) reported second quarter 2026 results that showed higher sales alongside lower net income and earnings per share. The figures give you fresh, concrete data to reassess how the stock fits your portfolio.

See our latest analysis for Radware.

Radware’s recent earnings update comes after a mixed share price run, with a 10.13% year to date share price return and a 3.40% 1 year total shareholder return. The 3 year total shareholder return of 53.61% points to stronger longer term momentum than the 5 year total shareholder return, which is down 18.33%.

If this earnings move has you thinking about where else growth and risk might be shifting, it could be a good moment to widen your search with 57 AI infrastructure stocks

Radware’s share price and earnings are now telling a slightly different story. Has the recent run and the softer profit line already captured most of the opportunity, or is there still clear upside on offer as you look at valuation next?

Preferred P/E of 63.8x for Radware: Is it justified?

Radware currently trades on a P/E of 63.8x, which is high relative to peers, so the question for you is whether the earnings profile supports that kind of pricing.

The P/E ratio compares the company’s share price to its earnings per share. For a software and cyber security business like Radware, a higher P/E often reflects the market assigning value to earnings growth, profitability trends, or perceived stability of future cash flows rather than just the latest quarter.

Radware’s earnings have grown by 16% per year over the past 5 years and by 21.9% over the last year, which is faster than the Software industry’s 21.2% over the same period. That growth backdrop may help explain why the stock trades above both the peer group average P/E of 25.8x and the wider US Software industry average of 29x. However, the company’s return on equity is 4.8%, which is described as low, and its SWS DCF model value of $18.97 sits below the current $26.19 share price, so the market is paying a premium that not all models support.

Compared to peers, the difference is clear. Radware’s 63.8x P/E is more than double the 25.8x peer average and well above the 29x industry average, which suggests investors are paying a substantial premium for each dollar of current earnings.

See what the numbers say about this price — find out in our valuation breakdown.

Result: Price-to-Earnings of 63.8x (OVERVALUED)

However, the Radware story could be tested if revenue growth slows from its recent 7.9% annual rate, or if profitability weakens from the current US$17.3m net income base.

Find out about the key risks to this Radware narrative.

Another view on Radware’s valuation

The high 63.8x P/E makes Radware look expensive on earnings. The SWS DCF model points the other way. It estimates a fair value of $18.97 per share compared with the current $26.19 price, which suggests the stock screens as overvalued on projected cash flows. Which signal do you trust more?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Radware for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 55 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

Given the mix of signals around Radware, it is worth weighing both the concern and the optimism yourself and not relying on a single metric. To move quickly from headline numbers to a fuller picture, start by reviewing where the balance sits between the 1 key reward and 2 important warning signs

Looking for more Radware investment ideas to compare?

If Radware’s latest numbers have you rethinking your next move, do not stop here. A broader watchlist can help you spot opportunities others overlook.

• Target potential bargains by scanning companies that screen well on quality and valuation using the 55 high quality undervalued stocks.
• Prioritise resilience by focusing on companies that combine financial strength and consistent balance sheets through the solid balance sheet and fundamentals stocks screener (45 results).
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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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