Why recent lawsuits are in focus for Commvault Systems (CVLT)

Multiple securities class action lawsuits over Commvault Systems (CVLT) Annual Recurring Revenue guidance after Q3 2026 results have pulled the stock into focus, putting disclosure practices and business quality under closer review.

After the lawsuits and Q3 2026 fallout, Commvault’s share price has seen a sharp rebound, with a 30 day share price return of 18.26% and a 90 day share price return of 39.65%. However, the year to date share price return is still down 2.12% and the 1 year total shareholder return is down 35.06%, while the 3 year total shareholder return of 70.86% suggests that sentiment has shifted more recently compared to the longer term.

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With the stock rebounding after its post lawsuit slump and trading at a discount to some estimated intrinsic values, the key question is whether Commvault is still undervalued today or if the market already reflects its future growth in the current price.

Most Popular Narrative: 10.9% Undervalued

Commvault’s most followed narrative pegs fair value at about $136.46 per share, compared with the recent close of $121.55, framing the stock as modestly undervalued on that view.

Rapid expansion and successful cross-sell and upsell momentum within the SaaS (Metallic) platform, evidenced by 63% SaaS ARR growth, a 45% increase in multi-product customers, and 125% SaaS net dollar retention, point to continued improvement in the quality and predictability of future revenues, directly supporting margin expansion and higher earnings visibility.

Curious what has to happen for that fair value to hold up? The narrative leans on faster earnings growth, rising margins, and a richer future earnings multiple. The exact mix of those ingredients might surprise you.

Result: Fair Value of $136.46 (UNDERVALUED)

However, this depends on risks, including potential margin pressure from the SaaS shift and acquisitions, as well as revenue volatility if large, timing-sensitive deals slow or slip.

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Another angle on valuation

While one narrative points to fair value around $136.46 per share and an undervalued stock, the current P/E of 71x tells a different story. That is far above the US Software industry at 29x, the peer average at 22.8x, and the fair ratio of 35.8x. This suggests meaningful valuation risk if sentiment cools.

To see how this high multiple compares with the underlying numbers, take a closer look at our valuation breakdown for Commvault Systems. This includes how earnings quality, growth and risks fit together in the See what the numbers say about this price — find out in our valuation breakdown.

Next Steps

With sentiment clearly mixed, both on valuation and the legal overhang, it makes sense to move quickly and weigh the trade off for yourself using the 2 key rewards and 2 important warning signs.

Looking for more investment ideas?

If you stop with just one stock, you miss out on opportunities that might fit your goals even better, so widen the net and compare a few standouts.

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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.