WEBULL
WebtradeDownload

Altus Group (TSX:AIF) Stock May Be 49% Undervalued As ARGUS Growth Builds

Simply Wall St · 2d ago

Altus Group has had a tough run over the past few years, and the recent share price slide puts fresh focus on a simple question for investors: Is the current valuation properly anchored to the cash flows that the business can generate from its commercial real estate analytics platform and services?

  • The stock has fallen 24.1% over the past 5 years, which raises the issue of whether recent weakness reflects its cash flow potential or has moved beyond what its underlying economics support.
  • Altus Group has been reshaped around its ARGUS software and related analytics, and a larger base of recurring software revenue can change how predictable and timing sensitive its future cash flows look.
  • What if you looked at Altus Group through its sales instead? See why Altus Group's 3.0x P/S tells a different valuation story.

The issue now is whether the cash flows implied by Altus Group's current share price justify where the stock trades today.

If you are weighing whether Altus Group's recent share price weakness lines up with its cash flow story, it can help to compare that question across 5 high quality undervalued stocks.

Is Altus Group a Bargain on Cash Flow?

The Discounted Cash Flow model uses projected free cash flows to estimate what Altus Group might be worth today based on its future cash generation. Altus Group produced trailing twelve month free cash flow of about CA$69.9 million, and the DCF framework here assumes those cash flows continue to grow rather than shrink, with analyst estimates pointing to higher free cash flow by 2027 and beyond. That kind of profile fits a business that is leaning more on recurring software revenue and less on lumpier project based work.

The projections indicate that these future cash flows, when discounted back to today, support an intrinsic value that sits substantially above the current CA$44.47 share price. News that ARGUS Assist is gaining traction and that commercial real estate software annual recurring revenue reached CA$107.9 million helps explain why the model leans on a growing cash flow trajectory, even if the market price has not fully reflected that view yet. Find out what Altus Group could be worth using our Discounted Cash Flow (DCF) estimate.

The Altus Group Narrative: What Would Justify Today's Price?

Narratives on Altus Group pick up where the cash flow puzzle leaves off by spelling out which paths for growth, margins and earnings would need to play out for the stock to be worth materially more or less than today, and they sit on Simply Wall St's Community page. Each one turns fair value into a clear, testable idea about how Altus Group's business could evolve, so you can see over time whether that story is holding up or breaking down.

One of the top community narratives on Altus Group: 13% undervalued

"Momentum in advanced real estate analytics and adoption of new pricing models supports sustained revenue and margin growth as industry digitization continues..."

Discover why this Narrative puts Altus Group at 13% undervalued.

Before acting on Altus Group's valuation, look at who is steering the ship

Cash flows and share price only tell part of the story for Altus Group, because the track record and pay structure of the people in charge can strongly influence how those numbers evolve over time. See who runs Altus Group and how they are paid.

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.