Is Adyen Attractively Priced After Recent Global Expansion Push?
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Wondering if Adyen is quietly turning into a value opportunity after a rough stretch, or if the market still has it priced for perfection, you are not alone.
The stock has been under pressure, with shares down about 2.2% over the last week, 1.5% over the past month, and roughly 11.3% over the last year, which naturally raises questions about whether sentiment has swung too far.
Recent headlines have focused on Adyen’s ongoing global expansion and partnerships in digital payments, highlighting its efforts to deepen relationships with large enterprise clients. At the same time, the broader conversation around competition in payments and shifting macro conditions has kept investors debating whether the current share price fully reflects the company’s long term growth potential.
Simply Wall St currently gives Adyen a valuation score of 1 out of 6, meaning it screens as undervalued on just one of six checks. In the sections ahead, we will break down what different valuation approaches really say about the stock, and finish with a more intuitive way to think about its true worth.
Adyen scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
The Excess Returns model looks at how much value Adyen can create over and above the return investors demand on its equity, rather than focusing on cash flows alone. In simple terms, it asks whether the company is earning enough on its book value, and for how long, to justify today’s share price.
Adyen’s current Book Value is about €148.38 per share, with a Stable Book Value projected to rise to €215.06 per share, based on estimates from 11 analysts. On that equity base, analysts expect Stable EPS of roughly €46.30 per share, implying an Average Return on Equity of 21.53%. With a Cost of Equity of €11.84 per share, the model estimates an Excess Return of €34.46 per share, reflecting value creation above the required return.
Combining these inputs, the Excess Returns valuation points to an intrinsic value of about €1,145 per share, which implies the stock is roughly 16.5% overvalued versus its current market price.
For a profitable business like Adyen, the price to earnings ratio is a practical way to think about valuation because it directly links what investors are paying today to the company’s current earning power. In general, faster growing and lower risk companies tend to command higher PE ratios, while slower growth or more uncertainty usually justify a lower multiple.
Adyen currently trades on a PE of about 42.2x, well above the Diversified Financial industry average of around 14.0x and the peer average of roughly 12.6x. On the surface, that suggests the market is clearly paying a premium for Adyen’s growth and quality. However, Simply Wall St’s Fair Ratio for Adyen is 20.7x, which is its proprietary estimate of what a reasonable PE should be once you factor in earnings growth, profitability, industry, market cap and company specific risks.
This Fair Ratio is more informative than a simple peer or industry comparison because it adjusts for how different Adyen is from a typical financial company in terms of growth and margins. When set against the current 42.2x PE, the 20.7x Fair Ratio indicates that, on this lens, the shares are pricing in a lot more optimism than the fundamentals justify.
Earlier we mentioned that there is an even better way to understand valuation. Let us introduce you to Narratives, a simple framework on Simply Wall St’s Community page that lets you attach a story to your numbers by spelling out how you think Adyen’s revenue, earnings, and margins will evolve. This turns that view into a financial forecast and then into a Fair Value you can compare against today’s Price to help you decide whether to buy, hold, or sell. The Narrative updates dynamically as new news or earnings arrive, and different investors naturally land on very different views. For example, one investor may take a bullish perspective that sees Adyen compounding revenue above 20 percent a year and justifying something like the higher end of analyst targets around €2,450. Another investor may take a more cautious view that assumes slower growth, more margin pressure and a lower exit multiple, implying fair value closer to €1,400. All of this is possible within the same intuitive tool used by millions of investors.
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 ADYEN.AS.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
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