Ever wondered if Rubrik is priced right for your portfolio, or if there is a hidden opportunity waiting to be discovered? Let us dig into what is really driving the stock’s value.
In the past year, Rubrik shares are up a notable 37.3%, despite experiencing a 2.7% dip over the last week and dropping 12.4% in the last month. These movements hint at shifting investor sentiment.
Market interest in Rubrik has increased following news of significant partnerships in the cloud-computing and data security space. These developments have fueled both optimism about long-term growth and debate about whether recent surges are justified.
Rubrik currently scores a 3 out of 6 on our undervaluation checks, so it is important to look beyond the headline numbers. In the sections ahead, we will break down the major valuation methods, and at the end, reveal an even better way to judge if the company offers value right now.
The Discounted Cash Flow (DCF) model estimates a company’s true worth by projecting its future cash flows and discounting them back to today’s value. This method aims to determine what Rubrik should be worth based on its potential to generate cash over the years ahead.
Currently, Rubrik has a Free Cash Flow (FCF) of $174.88 million. Analysts forecast significant growth, with expected FCF reaching $765.9 million by 2030. While experts typically provide five-year forecasts, projections beyond that point rely on careful extrapolation. All estimates here are expressed in US dollars.
Based on a 2 Stage Free Cash Flow to Equity model, the projected cash flows are discounted to account for risk and time. The resulting intrinsic value per share is $83.14. This figure is 18.0% above Rubrik’s current market price, suggesting the stock is trading at a notable discount to its true value.
This analysis implies that strong cash flow growth may not be fully priced in. The DCF model concludes Rubrik shares are undervalued relative to their projected long-term potential.
The Price-to-Sales (P/S) ratio is a commonly used valuation tool for companies like Rubrik, which are not yet profitable but show significant revenue growth. The P/S ratio tells investors how much they are paying for each dollar of Rubrik’s sales, helping to compare its valuation against other companies and the wider industry.
Growth expectations and risk play a key role in determining what a normal or fair P/S ratio should be. If a company is growing quickly and has a robust outlook, investors are typically willing to pay a higher multiple. However, higher perceived risks or slowing growth trends can drag this ratio down.
Currently, Rubrik’s P/S ratio stands at 12.43x. This is well above the software industry average of 4.69x but below the average peer group multiple of 23.47x. Simply Wall St calculates a proprietary “Fair Ratio” for Rubrik at 11.59x, taking into account its growth prospects, profit margins, business risks, industry characteristics, and market capitalization.
The Fair Ratio is important because it considers factors beyond simple averages, such as Rubrik’s unique growth profile and risk-adjusted outlook, making it a more accurate benchmark than typical peer or industry comparisons.
With Rubrik’s P/S ratio at 12.43x and the Fair Ratio at 11.59x, the valuation is close but slightly higher than justified by its fundamentals, suggesting the shares are modestly overvalued at current levels.
Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives. A Narrative is simply your investment story, linking your own perspective and reasoning—such as fair value assumptions, future revenue, earnings, and margin estimates—with the underlying numbers for Rubrik.
Unlike traditional models that just crunch data, Narratives connect the company’s story, including its strategic moves and industry position, to a financial forecast and, ultimately, to a fair value. Think of it as a framework that lets you track why you believe a company is a buy or a sell, and see how your thinking stacks up against other investors.
On Simply Wall St’s Community page, Narratives are easy to create and update, giving millions of investors an accessible tool to make smarter, more transparent decisions. When fresh news or new earnings come in, Narratives update dynamically, helping you continuously evaluate whether Rubrik’s price and fair value are still aligned with your story.
For example, some investors view Rubrik as a future leader in cyber-resilience and assign a high fair value—recent analyst targets reach as high as $125—while more cautious investors, wary of industry risks or profitability timelines, see fair value closer to $97. Narratives let you make your call and act confidently based on your own research, not just the numbers.
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.
Companies discussed in this article include RBRK.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
