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RingCentral (RNG): Valuation Check After Better‑Than‑Expected Earnings and Guidance Lift Investor Sentiment

Simply Wall St · 2d ago

RingCentral (RNG) just delivered quarterly results and guidance that cleared expectations, and that is what has the stock back on investors radar, even with ongoing insider selling in the background.

See our latest analysis for RingCentral.

Even with the latest earnings beat giving the story a lift, the 1 year total shareholder return of negative 26.5 percent and 5 year total shareholder return of negative 91.4 percent show that longer term holders are still deep in the red. As a result, the recent momentum feels more like a tentative reset in sentiment than a full change in trend at a 29 dollar and 24 cent share price.

If strong execution in communication and AI tools has your attention, this could be a good moment to explore other fast moving names via high growth tech and AI stocks.

With shares still down sharply over five years but now trading at a steep headline discount to some valuation models, the key question is whether RNG is genuinely undervalued or whether the market already sees limited upside from here.

Most Popular Narrative Narrative: 12% Undervalued

With RingCentral closing at 29 dollars and 24 cents, the most popular narrative points to a higher fair value based on disciplined growth and margin expansion.

The analysts have a consensus price target of 33 dollars and 24 cents for RingCentral based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of 55 dollars, and the most bearish reporting a price target of just 27 dollars.

Read the complete narrative.

Want to know what kind of revenue runway and margin lift could justify that spread in future earnings and valuation multiples? The growth blueprint behind this fair value hinges on aggressive profit expansion layered onto moderate top line growth. Curious which specific profitability path and share count assumptions drive that gap between today’s price and the narrative fair value? Read on to uncover how those projections combine into a single upside case.

Result: Fair Value of $33.24 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, growing competition from bundled suites and heavy AI investment that fails to scale profitably could quickly erode the upside in this narrative.

Find out about the key risks to this RingCentral narrative.

Build Your Own RingCentral Narrative

If aspects of this story do not quite align with your view, or you prefer to dig into the numbers yourself, you can build a tailored narrative in just a few minutes, starting with Do it your way.

A great starting point for your RingCentral research is our analysis highlighting 4 key rewards and 3 important warning signs that could impact your investment decision.

Looking for more investment ideas?

If you stop at RingCentral, you could miss standout opportunities the Simply Wall St Screener has already surfaced across value, income, growth and emerging themes.

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.