- Wondering whether Nutanix at around US$44.50 is priced for opportunity or risk? This article breaks down what the current share price may be implying about the stock's value.
- The stock recently closed at US$44.50, with returns of 3.2% over the past week and 19.3% over the past month, while being down 12.1% year to date and 45.6% over the last year, compared with a 69.4% gain over three years and a 50.5% gain over five years.
- Recent headlines around Nutanix have focused on its positioning within the software sector and ongoing attention from analysts and investors who track its business model and competitive footing. This context has kept the stock on many watchlists and helps explain why shorter term price moves can look very different from the longer term record.
- Nutanix currently has a valuation score of 4 out of 6, which means it screens as undervalued on most, but not all, of the checks used here. The next sections will compare different valuation methods on the stock and then finish with a way to go beyond the numbers-based models alone.
Find out why Nutanix's -45.6% return over the last year is lagging behind its peers.
Approach 1: Nutanix Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow model projects a company’s future cash flows and then discounts them back to today’s dollars, aiming to estimate what the entire business could be worth right now.
For Nutanix, the model used is a 2 Stage Free Cash Flow to Equity approach. The latest twelve month Free Cash Flow is about $752.1 million. Analyst projections and subsequent extrapolations suggest Free Cash Flow in the $753.3 million to $1,524.8 million range over the next decade, with Simply Wall St extrapolating beyond the years explicitly covered by analysts. For example, projected Free Cash Flow for 2028 is $1,019.9 million.
Discounting these projected cash flows back to today results in an estimated intrinsic value of about $75.63 per share. Compared with the recent share price of $44.50, the model indicates Nutanix trades at roughly a 41.2% discount to this DCF estimate, which screens as significantly undervalued on this metric.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Nutanix is undervalued by 41.2%. Track this in your watchlist or portfolio, or discover 47 more high quality undervalued stocks.
Approach 2: Nutanix Price vs Earnings
For profitable companies, the P/E ratio is often a useful yardstick because it ties the share price directly to the earnings that support it. You are essentially asking how many dollars you are paying for each dollar of current earnings.
What counts as a “normal” or “fair” P/E depends on how fast earnings are expected to grow and how risky those earnings are. Higher growth and lower perceived risk usually justify a higher P/E, while slower growth or higher risk tend to support a lower P/E.
Nutanix currently trades on a P/E of 44.18x. That sits above the broader Software industry average of 28.15x, but slightly below the peer group average of 46.72x. Simply Wall St’s Fair Ratio for Nutanix is 33.59x. This is a proprietary estimate of what Nutanix’s P/E might be based on factors such as its earnings growth profile, industry, profit margins, market cap and company specific risks.
Because the Fair Ratio adjusts for these company characteristics, it can give a more tailored reference point than a simple comparison with peers or the overall industry. With Nutanix trading at 44.18x versus a Fair Ratio of 33.59x, the stock screens as trading above this fair value yardstick on a P/E basis.
Result: OVERVALUED
P/E ratios tell one story, but what if the real opportunity lies elsewhere? Start investing in legacies, not executives. Discover our 20 top founder-led companies.
Upgrade Your Decision Making: Choose your Nutanix Narrative
Earlier it was mentioned that there is an even better way to understand valuation, so Narratives take the story you believe about Nutanix, link it to specific assumptions for future revenue, earnings and margins, turn that into a Fair Value, then compare it with the current price to help you decide whether the stock looks appealing or expensive, all within an easy Community tool on Simply Wall St that updates automatically as fresh news or earnings arrive. One investor might back a more optimistic Nutanix view with revenue growing around 17.6% a year and a Fair Value near US$90.95, while another leans cautious with revenue closer to 9.7% a year and Fair Value near US$53.00. Both perspectives sit side by side so you can see which story, numbers and price gap feel more realistic to you.
Do you think there's more to the story for Nutanix? 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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