Is ACV Auctions (ACVA) Pricing In Too Much Growth After A 57.9% One Year Decline

• If you are wondering whether ACV Auctions at around US$8.55 is pricing in too much hope or not enough, you are in the right place to size up what the current market price might be implying.
• The stock has returned 5.0% over the last 7 days and 4.9% over the past month, although the 1 year return sits at a 57.9% decline, which may signal that expectations and perceived risk have shifted over time.
• Recent commentary around ACV Auctions has largely focused on its position in the online wholesale vehicle auction space and how investors assess its ability to convert that position into sustainable cash flows. This backdrop helps explain why the share price has seen short term gains alongside a weaker 1 year return, as the market weighs growth potential against execution risk.
• On our checks, ACV Auctions records a valuation score of 2 out of 6, which suggests mixed signals that are worth unpacking with several common valuation approaches, before we finish with a more holistic way to think about what the shares might be worth.

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

Approach 1: ACV Auctions Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model projects a company’s future cash flows and then discounts them back to today to estimate what the entire business might be worth in present dollars.

For ACV Auctions, the model uses a 2 Stage Free Cash Flow to Equity approach based on cash flow projections. The latest twelve month free cash flow is about $45.25 million. Analysts provide explicit free cash flow estimates out to 2030, with Simply Wall St extending the projections further out to 2035 using its own growth assumptions. For example, projected free cash flow in 2030 is $307.50 million, with subsequent years estimated using percentage growth rates supplied in the model.

Combining these forecast cash flows and discounting them back to today gives an estimated intrinsic value of $61.34 per share. Compared with a current share price of around $8.55, the DCF output suggests the stock is 86.1% undervalued on these assumptions.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests ACV Auctions is undervalued by 86.1%. Track this in your watchlist or portfolio, or discover 877 more undervalued stocks based on cash flows.

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

Approach 2: ACV Auctions Price vs Sales

For a business like ACV Auctions, where investors often focus on revenue traction, the Price to Sales, or P/S, ratio is a useful cross check because it compares what the market is paying for each dollar of sales rather than profits, which can be more volatile.

Growth expectations and perceived risk both influence what feels like a reasonable P/S ratio. Higher growth and lower risk usually support a higher multiple, while slower growth or higher risk tend to justify a lower one.

ACV Auctions currently trades on a P/S of 2.00x, compared with the Commercial Services industry average of about 1.15x and a peer average of 1.21x. Simply Wall St also provides a Fair Ratio of 1.15x, which represents the P/S multiple suggested by its model, given factors such as earnings growth, industry, profit margins, market cap and risk profile.

This Fair Ratio is designed to be more tailored than a simple peer or industry comparison because it adjusts for the company’s own growth outlook, risk and financial characteristics rather than assuming that one size fits all.

Since the current 2.00x P/S sits above the 1.15x Fair Ratio by more than 0.10, the shares screen as expensive on this metric.

Result: OVERVALUED

P/S ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1448 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your ACV Auctions Narrative

Earlier we mentioned that there is an even better way to understand valuation. On Simply Wall St’s Community page you can use Narratives to attach your own story about ACV Auctions to the numbers by setting assumptions for future revenue, earnings and margins. You can then link that story to a forecast and a fair value, and compare it with the current price to decide whether the shares look attractive or not right now. The tool keeps updating when new news or earnings arrive. For example, one investor might build a Narrative that leans closer to the higher analyst price target of US$27.50, while another might anchor on the lower US$6.00 view, and you can see both side by side and decide which story you find more reasonable.

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