Is It Time To Reassess OneStream (OS) After A Mixed Year Of Share Price Moves?
- If you are wondering whether OneStream is priced attractively or looking stretched right now, this article will walk through what the current share price might imply about the company.
- The stock last closed at US$23.35, with returns of a 1.2% decline over 7 days, a 1.1% decline over 30 days, a 31.8% gain year to date, and a 20.8% decline over the past year, which can leave investors unsure whether the recent moves signal opportunity or rising risk.
- Recent ongoing coverage of OneStream has focused on its position in the software space and how investors are weighing that against broader sector sentiment. This context helps explain why the share price has seen mixed shorter term performance while still sitting below its 1 year level.
- On our checks, OneStream scores 1 out of 6 on valuation, as shown in our valuation summary. Next we will walk through what different valuation methods suggest about that score and hint at a more complete way to think about value at the end of the article.
OneStream scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
Approach 1: OneStream Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow, or DCF, model estimates what a company could be worth by projecting its future cash flows and then discounting those back to today using a required rate of return.
For OneStream, the model used is a 2 Stage Free Cash Flow to Equity approach, based on its latest twelve month free cash flow of about $93.2 million. Analysts provide explicit free cash flow estimates for the next few years, and Simply Wall St then extrapolates beyond that to build a longer term view. Under these projections, free cash flow is expected to reach about $354 million by 2030 in dollar terms, with a series of annual estimates in between that are discounted back to today.
When all those discounted cash flows are added up, the model arrives at an estimated intrinsic value of about $27.72 per share, compared with the recent share price of $23.35. That gap implies the shares are trading at roughly a 15.8% discount to this DCF estimate.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests OneStream is undervalued by 15.8%. Track this in your watchlist or portfolio, or discover 55 more high quality undervalued stocks.
Approach 2: OneStream Price vs Sales
For companies where investors are focused on revenue rather than profits, the P/S ratio is often a useful yardstick because it compares what the market is paying for each dollar of sales. It is especially common for software names where earnings can be influenced by investment in growth.
What investors consider a fair P/S ratio usually reflects how strong they think future growth could be and how much risk they see in those sales. Higher expected growth or lower perceived risk can support a higher multiple, while slower growth or higher risk often calls for a lower one.
OneStream currently trades on a P/S ratio of 7.75x. That is above both the Software industry average of 3.71x and the peer average of 6.42x. Simply Wall St also calculates a Fair Ratio of 5.58x, which is the P/S level it would expect given factors such as the company’s growth profile, margins, size and risk characteristics. This Fair Ratio is more tailored than a simple comparison with peers or the industry because it adjusts for those company specific traits. Set against that 5.58x Fair Ratio, the present 7.75x P/S suggests the shares may be pricing in richer expectations than the model implies.
Result: OVERVALUED
P/S ratios tell one story, but what if the real opportunity lies elsewhere? Start investing in legacies, not executives. Discover our 22 top founder-led companies.
Upgrade Your Decision Making: Choose Your OneStream Narrative
Earlier we mentioned that there is an even better way to understand valuation. Let us introduce you to Narratives, which Simply Wall St makes available on the Community page used by millions of investors.
A Narrative is your story about a company, where you set out what you think might happen to its revenue, earnings and margins, and then link that story to a clear set of numbers such as your own fair value estimate.
Instead of looking at ratios in isolation, a Narrative connects three things in one place: the company’s story, your forecast, and the fair value those assumptions point to.
On Simply Wall St, Narratives are easy to use. They refresh when new information such as news or earnings is added and help you see whether your fair value for OneStream sits above or below the current share price. This can help you decide how the current price compares to your view of the company’s value. For example, one investor might see OneStream’s fair value far above today’s price, while another might set it well below, based on different expectations for future revenue, margins and required return.
Do you think there's more to the story for OneStream? 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com