• Wondering if Take-Two Interactive Software is priced attractively right now, or if the stock has already run too far ahead of its value?
• The stock recently closed at US$238.72, with the share price roughly flat over the past 7 days, up 8.2% over the past month, slightly down 5.1% year to date, and down 0.3% over the past year, while still up 64.1% over 3 years and 33.4% over 5 years.
• Recent news flow around Take-Two Interactive Software has focused on its position as a major publisher in the video game industry and how that status fits into investor expectations for large gaming franchises. This context helps explain why the stock price can shift as the market reassesses future project pipelines and the timing of major releases.
• Even so, Take-Two Interactive Software currently scores 0 out of 6 on Simply Wall St's valuation checks, as shown by its valuation score. The next step is to unpack what different valuation approaches say about the stock today, and then look at a more complete way to think about value at the end of this article.

Take-Two Interactive Software scores just 0/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Take-Two Interactive Software Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model estimates what Take-Two Interactive Software might be worth by projecting its future cash flows and then discounting those back to today in dollar terms. The idea is simple: you look at the cash that could be available to shareholders over time and ask what that stream is worth right now.

Take-Two Interactive Software last reported Free Cash Flow of about $417.1 million. Analysts and internal estimates are used to build a 2 Stage Free Cash Flow to Equity model, with explicit forecasts out to 2031 and then extrapolated figures after that. For example, projected Free Cash Flow for 2031 is $2.739 billion, with intermediate years such as 2026 to 2030 ranging from the low hundreds of millions up into the billions according to the supplied projection schedule.

Pulling these projected cash flows together, Simply Wall St’s DCF model arrives at an estimated intrinsic value of $227.44 per share. Compared to the recent share price of $238.72, this implies Take-Two Interactive Software is about 5.0% overvalued on this model, which is a relatively small gap.

Result: ABOUT RIGHT

Take-Two Interactive Software is fairly valued according to our Discounted Cash Flow (DCF), but this can change at a moment's notice. Track the value in your watchlist or portfolio and be alerted on when to act.

Approach 2: Take-Two Interactive Software Price vs Sales

For a stock like Take-Two Interactive Software, where earnings can be volatile, the P/S ratio is often a practical way to compare what investors are paying relative to the company’s revenue base. Higher expected growth and lower perceived risk usually support a higher “normal” or “fair” P/S multiple, while slower growth and higher risk tend to justify a lower one.

Take-Two Interactive Software currently trades on a P/S ratio of 6.66x. That sits well above the Entertainment industry average P/S of 1.19x and also above the peer group average of 3.79x, which suggests investors are paying a premium relative to both the wider industry and closer comparables.

Simply Wall St’s Fair Ratio for Take-Two Interactive Software is 3.23x. This is a proprietary estimate of what a reasonable P/S might be, given factors such as earnings growth, industry, profit margin, market cap and company specific risks. Because it blends these company level characteristics with the broader context of its sector and size, the Fair Ratio can be a more tailored benchmark than a simple comparison with industry or peer averages. Set against the current 6.66x, the Fair Ratio indicates the stock price embeds a materially higher valuation than this model suggests.

Result: OVERVALUED

P/S 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 Take-Two Interactive Software Narrative

Earlier the article mentioned that there is an even better way to understand valuation, and on Simply Wall St this is done through Narratives, where you tell a clear story about Take-Two Interactive Software, set your assumptions for future revenue, earnings and margins, and the platform turns that story into a forecast and a Fair Value that you can compare with today’s price.

In practice, a Narrative links three things: the company story you believe, the financial path that flows from that story, and the Fair Value that follows from those numbers. All of this is surfaced for you inside the Community page that millions of investors use on Simply Wall St.

That structure then helps you decide what action makes sense for you by setting your own Fair Value and seeing at a glance whether Take-Two Interactive Software looks expensive or cheap relative to your Narrative. Because these Narratives update automatically when new results or news arrive, you are not stuck with a stale view.

For example, one Take-Two Interactive Software Narrative on the Community page currently anchors on a Fair Value of about US$207 per share, another at about US$320 per share, and a third around US$219 to US$278. This shows how different investors can look at the same stock, plug in different revenue growth, margins, discount rates and future P/E multiples out to around 2028 or 2029, and arrive at very different but clearly explained conclusions.

For Take-Two Interactive Software, here are previews of two leading Take-Two Interactive Software Narratives that may help you compare different perspectives:

Fair Value: US$276.97 per share

Implied discount to Fair Value: 13.8% below this narrative's Fair Value

Revenue growth assumption: 47.09%

• Sees Grand Theft Auto VI as a potential step change for Take-Two Interactive Software, with pre orders, trailers and a large Gen 9 console base setting up a major launch window.
• Emphasises the breadth of the portfolio across mobile, console and PC, with recurring in game spending and a deep development pipeline supporting the longer term story.
• Frames upside and downside cases around different outcomes for GTA VI timing and reception, with an overall view that the risk reward skews to the upside under this set of assumptions.

Fair Value: US$219.09 per share

Implied premium to Fair Value: 8.9% above this narrative's Fair Value

Revenue growth assumption: 8.99%

• Highlights pressure from weaker trends in some mobile titles, high development and marketing costs, and potential softness in Grand Theft Auto Online as factors that could weigh on margins.
• Builds a cautious earnings path where revenue grows at a single digit rate and margins recover over several years, requiring a high future P/E multiple to justify the Fair Value.
• Stresses that to agree with this view, you would need to accept more modest outcomes for key releases and a tighter gap between current pricing and the analysts' lower end targets.

If you want to see how these and other community views compare with your own assumptions about Take-Two Interactive Software, it may be helpful to review the full range of narratives and stress test which inputs you agree with most, from revenue growth and margins through to valuation multiples.

Do you think there's more to the story for Take-Two Interactive Software? 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.