RingCentral (RNG) shares have been in focus after a busy February, when the company reported full year 2025 earnings, initiated a quarterly dividend, expanded its buyback authorization, and outlined new 2026 revenue guidance.

Those February announcements appear to have reset sentiment around RingCentral, with a 39.64% 30 day share price return and 30.99% year to date share price return pointing to building momentum despite a 5 year total shareholder return of 88.54%.

If this mix of AI rollout, dividends, and buybacks has caught your interest, it could be a useful moment to broaden your view with 19 top founder-led companies

With RingCentral now profitable, paying a dividend, buying back shares, and leaning into AI, the key question is whether the current valuation still leaves room for upside or if the market is already pricing in the next leg of growth.

Most Popular Narrative: 14.6% Undervalued

RingCentral's most followed narrative pegs fair value at $42.32, above the last close at $36.14, and builds that gap on detailed growth and profitability assumptions.

With its multiproduct strategy including native AI powered voice, contact center, and global messaging, RingCentral is described as uniquely positioned to cross sell and upsell within a customer base spanning 500,000 businesses, leveraging operational efficiency and platform integration for operating margin and free cash flow expansion beyond current projections.

Curious what kind of revenue trajectory and margin profile underpin that $42.32 fair value, and how they tie to future earnings and valuation multiples? The narrative focuses on a defined path for growth, profitability, and a future P/E that differs from many peers, but the exact mix of assumptions might be unexpected.

Result: Fair Value of $42.32 (UNDERVALUED)

However, that path relies on RingCentral keeping up with big tech competitors in AI and avoiding any strain on key partnerships that support its higher value offerings.

Another View: Earnings Multiple Paints A Tougher Picture

The narrative fair value of $42.32 suggests upside, but the current P/E of 71.3x tells a different story. It stands well above the US Software industry at 26.4x, the peer average at 34.7x, and even the 45.8x fair ratio our model points to. This raises the question of how much optimism is already in the price.

Next Steps

Reading all this, you can see the story is not one sided, with both concerns and reasons for optimism in play. Take a moment to review the numbers for yourself and then weigh up 3 key rewards and 4 important warning signs

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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.