SPS Commerce (SPSC) Could Be 20% Below Fair Value If Growth Rebuilds
SPS Commerce (SPSC) has drawn investor attention after its recent share price move, with the stock last closing at US$82.35. That level now sits against a longer record of mixed short and multi year returns.
Recent trading in SPS Commerce has been choppy, with the share price down 2.2% on the day and modestly lower over the past month, yet still showing a strong 39.4% 90 day share price return. However, the 1 year total shareholder return is down 22.3%, and the 3 and 5 year total shareholder returns are also deeply negative. This points to short term momentum rebuilding after a much tougher multi year stretch for longer term holders.
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SPS Commerce has bounced hard in the last 3 months, but long-term returns remain weak. Does the current valuation still leave enough upside to justify that risk for new buyers?
Most Popular Narrative: 20% Undervalued
On the most followed narrative, SPS Commerce screens as undervalued, with a fair value estimate of $102.72 against the last close at $82.35. This puts the recent rebound in a different light for anyone weighing fresh capital.
The main thing that has to go right is that SPS Commerce turns broad MAX adoption, cross sell of revenue recovery and analytics, and rising gross margins from AI driven onboarding into durable ARPU growth without eroding customer retention.
The numbers imply the share price already reflects only mid to high single digit growth and a steady EBITDA margin in the mid 30s. Any sustained outperformance on ARPU, or a takeout closer to recent analyst upside cases, would point to SPS Commerce being undervalued.
See why 0 investors see SPS Commerce as 20% undervalued.
Result: Fair Value of $102.72 (UNDERVALUED)
Still, the SPS Commerce story can break if MAX agents fail to convert into paid tiers or if the 1P revenue recovery shift underwhelms existing customers.
Find out about the key risks to this SPS Commerce narrative.
Next Steps
If the combination of weak long term returns and a bullish SPS Commerce valuation view leaves you unsure, go straight to the underlying data and make the call yourself. To see what optimism is built into the story before you decide, review the 2 key rewards
Looking for more investment ideas beyond SPS Commerce?
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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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