Is Reply (BIT:REY) Pricing Look Interesting After Recent Share Price Weakness?
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If you are wondering whether Reply’s current share price lines up with its underlying value, or if the market is mispricing it, this article is designed to help you answer that question with a clear, method-based view.
Reply shares last closed at €93.55, with returns showing a 4.6% decline over 7 days, a 20.0% decline over 30 days, a 15.6% decline year to date, a 42.4% decline over 1 year and 20.3% and 6.8% declines over 3 and 5 years respectively.
Recent price moves are occurring alongside ongoing interest in Reply as a listed IT and software services company, including regular industry coverage that keeps investors focused on how digital consulting and technology spending trends may affect the business. These headlines are keeping valuation in the spotlight and raising questions about whether current pricing already reflects these concerns.
On our checklist-based approach, Reply scores 5 out of 6 on the valuation score, which you can review in detail here. Next we will walk through the key valuation methods behind that score and then finish with a way to assess value that goes beyond a single number.
A Discounted Cash Flow, or DCF, model estimates what a company might be worth by projecting its future cash flows and then discounting those back to today, so you can compare that value with the current share price.
For Reply, the model used is a 2 Stage Free Cash Flow to Equity approach, based on cash flow projections. The latest twelve month Free Cash Flow is about €319.3m. Analysts provide explicit forecasts for several years, such as projected Free Cash Flow of €249.0m in 2026 and €279.1m in 2027, with later years out to 2035 extrapolated by Simply Wall St from those estimates. By 2030, Free Cash Flow is projected at €331.0m, with each future year discounted back to a present value in €.
Adding those discounted cash flows together gives an estimated intrinsic value of €96.80 per share. Compared with the recent share price of €93.55, this suggests Reply trades at about a 3.4% discount to the model’s estimate, which is a relatively small gap.
Result: ABOUT RIGHT
Reply 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.
For a profitable company like Reply, the P/E ratio is a useful way to relate what you pay per share to the earnings the business is currently generating. Investors usually accept a higher or lower P/E depending on what they expect for future growth and how risky they think those earnings are.
Reply currently trades on a P/E of 13.25x. That sits below the IT industry average of 19.22x and also below the broader peer average of 24.19x. On the surface, this points to a lower earnings multiple than many similar companies.
Simply Wall St’s Fair Ratio for Reply is 23.63x. This is a proprietary estimate of what Reply’s P/E might be, based on factors like its earnings growth profile, industry, profit margins, market cap and company specific risks. Because it adjusts for these features, the Fair Ratio can be more informative than a simple comparison with peers or an industry average, which treats all companies as if they had the same outlook and risk.
With a Fair Ratio of 23.63x versus the current 13.25x, Reply’s P/E sits below this model based estimate.
Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, where you attach a clear story about Reply to the numbers you think are realistic for its future revenue, earnings, margins and fair value.
A Narrative links what you believe about the company, such as its role in IT and software services and how it might execute its plans, to a structured financial forecast and then to a fair value that you can compare with today’s share price.
On Simply Wall St, Narratives sit inside the Community page. They are used by millions of investors as a simple tool to see how their own view of Reply translates into a Fair Value, when that Fair Value suggests the price is attractive or expensive, and what might change their mind when new news or earnings arrive.
Narratives update as fresh information is added. One investor might have a more cautious Reply Narrative with a lower Fair Value, while another might have a more optimistic Narrative with a higher Fair Value. Both can quickly see how their view compares with the current price.
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 REY.MI.
