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With no specific news catalyst making headlines today, Unity Software (U) is still on investors’ radar after a mixed trajectory, including a small gain in the past week and a decline in the past month.
The stock’s past three months show positive total returns, while the past year and past three year periods also reflect gains. However, over the past five years, holders have experienced a significant decline in total returns, which could be important if you have a longer history with the name.
On the fundamental side, Unity reports annual revenue of $1.80 billion and a net loss of $435.53 million. Recent annual figures show revenue growth of 12.18% and net profit growth of 46.11%, giving investors an idea of how the company is progressing, even if it remains unprofitable.
Check out our latest analysis for Unity Software.
Unity’s 90-day share price return of 13.54% is in stark contrast to a 30-day share price decline of 6.82% and a much stronger 1-year total shareholder return of 89.70%. This suggests that momentum has cooled recently after a longer-term period of strength.
If Unity’s recent swings have you reassessing your watchlist, now could be a good time to scan other high-growth tech and AI names through high-growth tech and AI stocks.
So with Unity trading at $42.34, an intrinsic value estimate implying roughly a 25% discount, and a modest gap to analyst targets, is the market leaving a potential entry point on the table or already pricing in future growth?
Unity’s most followed story estimates fair value at around $45.63 versus the recent closing price of $42.34, with the current share price modestly below that estimate.
The expansion of Unity’s customer base and deeper partnerships with leading global gaming and enterprise players (e.g. Tencent, Scopely, Nintendo, BMW), along with unique cross-platform capabilities (including a leading presence in China), unlock new long-term customer pipelines and diversified revenue streams, supporting both revenue growth and improved earnings stability.
Read the full story.
Curious about what revenue growth path and future margins lie behind that valuation, and how much of Unity’s earnings power depends on those new ecosystems coming together?
Result: Fair value of $45.63 (UNDERVALUE)
Read the story completely and understand what is behind the predictions.
However, that story could quickly change if Unity’s high AI spend puts pressure on profitability or if newer non-gaming verticals fail to deliver meaningful, repeatable revenue.
Read more about the key risks of this Unity Software story.
That story-based fair value of $45.63 suggests Unity is modestly undervalued, but the picture looks different when you look at the price tag. With a price-to-earnings ratio of around 10x, Unity trades well above the US software average of 4.7x, a peer average of 6.3x, and even its own fair ratio estimate of 8.6x. Is the market paying for future potential or just increasing risk?
See what the numbers say about this price – find out in our valuation overview.
If this version of the story doesn’t quite fit how you see the numbers, you can test the assumptions yourself and create a new version in minutes with Do It Your Way.
A good starting point for your Unity Software research is our analysis, which highlights two key rewards and one major warning sign that could impact your investment decision.
If Unity is just one part of your watchlist, don’t stop here. You owe it to yourself to scan new ideas that suit your style.
This article from Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts using only an unbiased methodology and our articles are not intended as financial advice. It is not a recommendation to buy or sell any stock and does not take into account your objectives or financial situation. We aim to provide you with targeted, long-term analysis based on fundamental data. Please note that our analysis may not take into account the latest price-sensitive company announcements or quality material. Simply Wall St has no positions in the stocks mentioned.
Companies discussed in this article include U.
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