• If you are wondering whether Zeta Global Holdings stock offers good value at its recent price, it helps to step back and look at what the market is currently paying for its future potential.
• The share price last closed at US$18.05, with returns of 8.9% over the past week, 1.3% over the past month, a decline of 9.3% year to date, and 36.0% over the past year, while the three year return sits at 109.6%.
• Recent headlines around Zeta Global Holdings have focused on the stock's performance and how investors are reassessing growth potential and risks relative to other software peers. This context is key because shifts in sentiment often show up in the share price before they appear in traditional valuation metrics.
• Right now, Zeta Global Holdings scores a 5/6 valuation check score, and the sections ahead will walk through what different valuation approaches say about the stock, before finishing with a framework that can help you judge whether that score fits your own view of value.

Approach 1: Zeta Global Holdings Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model projects a company’s future cash flows and then discounts them back to today’s dollars to estimate what the business might be worth right now.

For Zeta Global Holdings, the model used is a 2 Stage Free Cash Flow to Equity approach. The latest twelve month free cash flow sits at about $165.6 million, and analysts provide specific estimates out to 2027, with free cash flow for that year projected at $284.89 million. Beyond that, Simply Wall St extrapolates cash flows out to 2035, with the 2035 projection at $503.21 million, all in $.

Discounting these projected cash flows back to today gives an estimated intrinsic value of $27.77 per share. Compared with the recent share price of $18.05, the DCF output suggests Zeta Global Holdings trades at roughly a 35.0% discount to this intrinsic value, which in this model indicates that the stock appears undervalued on these assumptions.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Zeta Global Holdings is undervalued by 35.0%. Track this in your watchlist or portfolio, or discover 53 more high quality undervalued stocks.

Approach 2: Zeta Global Holdings Price vs Sales

For companies where earnings are not the main focus, the P/S ratio can be a useful way to compare how much investors are paying for each dollar of revenue. It is especially common for software stocks, where reported earnings can be influenced by heavy investment and non cash items.

What counts as a "normal" P/S ratio often reflects how quickly revenue is expected to grow and how risky those expectations appear. Higher growth and lower perceived risk can justify a higher multiple, while slower growth or higher uncertainty tends to point to a lower one.

Zeta Global Holdings currently trades on a P/S ratio of 3.13x, compared with the Software industry average of 3.57x and a peer group average of 4.38x. Simply Wall St also provides a Fair Ratio of 4.38x, which is the P/S multiple suggested by factors such as the company’s growth profile, industry, profit margins, market value and risk characteristics.

This Fair Ratio aims to be more tailored than a simple comparison with peers or the broad industry, because it adjusts for company specific features rather than using one size fits all benchmarks. With the current P/S of 3.13x sitting below the Fair Ratio of 4.38x, the stock screens as undervalued on this metric.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your Zeta Global Holdings Narrative

Earlier it was mentioned that there is an even better way to understand valuation. Narratives are introduced here as a simple story you build around your numbers, where you link what you think Zeta Global Holdings will do in terms of revenue, earnings and margins to a Fair Value estimate. You then compare that to the current price to decide whether the stock looks attractive or stretched for you. Simply Wall St’s Community page can then keep that view up to date as new earnings or news arrive. For example, one investor might plug in the more cautious Fair Value of US$22.00, while another uses a more optimistic Fair Value of US$39.26, yet both are using the same tool to turn their view of the business into a clear, comparable valuation that fits their own decision making.

Do you think there's more to the story for Zeta Global Holdings? 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.