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When InvestingPro’s Fair Value models identified ACI Worldwide (NASDAQ:ACIW) as significantly undervalued in May 2024, the payment software provider’s stock was trading at $34.90. Today, with shares at $50.18, that analysis has yielded an impressive 48% return for investors who followed the signal. This success demonstrates the power of comprehensive Fair Value analysis in identifying market inefficiencies and potential investment opportunities. Investors seeking similar opportunities can explore our regularly updated Most undervalued list.
ACI Worldwide provides mission-critical software for electronic payments, serving over 6,000 organizations globally. When InvestingPro’s models flagged the stock, the company was showing solid fundamentals with annual revenue of $1.48 billion and EBITDA of $330.9 million, yet the market appeared to be undervaluing its growth potential and strong market position in payment processing solutions.
The subsequent performance has validated InvestingPro’s analysis. Since the Fair Value signal, ACI Worldwide has demonstrated robust financial growth, with revenue increasing to $1.59 billion and EBITDA reaching $361.1 million. The company’s earnings per share have surged from $1.35 to $1.93, representing a 42.9% increase. This fundamental improvement has been recognized by the market, driving the stock’s appreciation.
Recent developments have further supported the bullish thesis. S&P upgraded ACI Worldwide’s credit rating to ’BB+’, citing lower leverage and improved growth prospects. The company has consistently beaten earnings expectations, raised guidance multiple times, and announced a substantial $400 million stock buyback program. Several analysts have raised their price targets, with some seeing additional upside to $68 per share.
InvestingPro’s Fair Value methodology combines multiple valuation approaches, including discounted cash flow analysis, peer comparisons, and market sentiment indicators. This comprehensive approach helps identify stocks trading significantly below their intrinsic value, providing investors with data-driven insights for their investment decisions.
For investors looking to uncover similar opportunities, InvestingPro offers advanced valuation tools, financial health scores, and proprietary Fair Value models. With features like real-time Fair Value updates, extensive fundamental analysis, and professional-grade research tools, InvestingPro helps investors identify and capitalize on market inefficiencies before the broader market catches up.