Procore Technologies

Procore Technologies Inc receives a 3-star quantitative star rating, illustrating our stance that this share class is a balanced choice, but prudent investors should consider looking elsewhere. The stock currently trades at a price consistent with our quantitative fair value estimate, which has a high uncertainty rating.

The company's valuation metrics decrease our estimated fair value. A company's valuation metrics provide insights into the market's expectations for its future growth and profitability. Reflecting the firm's valuation is its enterprise value to EBITDA ratio of 22.6, which falls in the top 30% compared with global peers. This suggests that the value of its enterprise value, or the value of its shares and debt, is a high multiple of the generated EBITDA. This contributes to our balanced fair value estimate.

The company's lack of profitability is an additional cause for concern. Companies with low profitability are often less resilient in recessions and are likely to generate weaker future cash flows for shareholders. The firm's enterprise value to free cash flow ratio of 32.3, a core component of profitability, lies in the top 40% compared with peers globally. This suggests limited cash flow is available for reinvestment or return to shareholders, which further promotes our neutral price/fair value ratio.

In addition to the aforementioned drivers, our model considers momentum as part of its comprehensive analysis. This share class has been a laggard relative to the broader universe over the past year. While we believe the stock is fairly-valued, this underperformance had a positive impact on our valuation estimate.

With its quantitative economic moat rating of none, this business is unlikely to consistently outearn its cost of capital without structural protection from competition. Additionally, the firm's moderate financial health score suggests it is acceptably positioned against adverse economic circumstances.