Key Takeaways:
- The 2-Minute Valuation Model values SentinelOne stock at $26 per share in 2 years.
- That’s a potential 37% upside from today’s price of $19 per share, which would translate to approximately 17% annual returns over the next two years.
- SentinelOne is projected to achieve profitability with dramatic EPS growth over the next two years.
- The stock is trading at compressed multiples despite being a leading AI-powered cybersecurity platform.
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SentinelOne (S) is a leading cybersecurity company that provides AI-powered endpoint protection, detection, and response solutions.
As one of the fastest-growing players in the next-generation cybersecurity market, SentinelOne has established itself as a disruptive force challenging traditional antivirus solutions with its autonomous security platform.
With S stock now trading at around $19 per share, SentinelOne presents a compelling turnaround opportunity for investors seeking exposure to the cybersecurity growth story at an attractive entry point following significant multiple compression.
Let’s examine why this AI-powered cybersecurity leader could deliver substantial returns as the company approaches profitability and market adoption accelerates.
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What is the 2-Minute Valuation Model?
Three core factors drive a stock’s long-term value:
- Revenue Growth: How big the business becomes.
- Margins: How much the business earns in profit.
- Multiple: How much investors are willing to pay for a business’s earnings.
Our 2-Minute Valuation Model uses a simple formula to value stocks:
Expected Normalized EPS * Forward P/E ratio = Expected Share Price
Revenue growth and margins drive a company’s long-term normalized earnings-per-share (EPS), and investors can use a stock’s long-term average P/E multiple to get an idea of how the market values a company.
Why SentinelOne Stock Looks Undervalued
Forecast
Based on analyst estimates shown in the chart below, SentinelOne is expected to achieve a dramatic turnaround over the next three years as the company transitions to profitability.
EPS is projected to recover from -$0.28 in 2024 to $0.85 by 2027, indicating a remarkable transformation from losses to meaningful profitability.
The recovery appears to be gaining momentum. In 2025, losses are expected to narrow sharply, with normalized EPS turning positive at $0.05. The company is projected to achieve positive operating income by 2026, with normalized EPS rising to $0.19, followed by strong growth of 82% in 2027.
This earnings growth for SentinelOne stock is likely to be driven by:
- Market share expansion: SentinelOne is gaining ground against legacy cybersecurity vendors with its AI-native platform
- Operating leverage: As a software company, SentinelOne benefits from significant scale economies as revenues grow
- Enterprise adoption: Large enterprises are increasingly adopting next-generation endpoint protection solutions
- Margin expansion: Improved operational efficiency and scale should drive the path to profitability
For our valuation, we’ll estimate that SentinelOne stock will reach $0.34 in EPS in 2027.
See SentinelOne’s full analyst estimates (It’s free) >>>
Valuation Multiple
As shown in the valuation chart, SentinelOne stock trades at approximately 85x forward earnings today, which is below its year-to-date historical average P/E of 127x.
For our valuation, we’ll use a conservative forward P/E multiple of 75x. This is well below the company’s historical average and current multiple, and is reasonable given that SentinelOne is expected to grow revenue and earnings at an enviable rate.
Fair Value of SentinelOne Stock
Using our 2-Minute Valuation Model and applying a conservative approach:
- Conservative 2027 EPS estimate: $0.34
- Conservative forward P/E multiple: 75x
Expected Normalized EPS ($0.34) * Forward P/E ratio (75x) = Expected Share Price ($26)
The 2-year expected SentinelOne stock price we would get from this valuation is $26 per share.
With the tech stock currently trading at around $19 per share, this implies a potential upside of 37% over the next two years or a 17% annualized return.
A 17% annual return would be nice for investors, considering the S&P 500 index has delivered approximately 10% annual returns over the last six decades.
Remember, this is just a valuation exercise, and we don’t know for sure what the stock’s price will be in the future.
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What is the Average Analyst Price Target for SentinelOne Stock?
Analysts think SentinelOne stock is undervalued, with an average price target of $24.50. That implies approximately 25% upside from its current trading price.
Risks to Consider
Despite the bullish outlook, investors should be aware of several risks that could impact the tech stock’s growth trajectory:
- Profitability execution: The company must successfully navigate the transition to profitability while maintaining growth.
- Competitive pressure: Intense competition from both established players, like CrowdStrike, and new entrants.
- Market saturation: The cybersecurity market could become increasingly crowded and commoditized.
- Economic sensitivity: Enterprise IT spending could be impacted by economic downturns.
TIKR Takeaway
SentinelOne presents a compelling turnaround opportunity at current levels. The tech stock’s upside potential is driven by the company’s leadership position in AI-powered cybersecurity and its approaching profitability inflection point, all while trading at historically compressed valuation multiples.
While SentinelOne faces execution risks typical of high-growth software companies transitioning to profitability, its innovative technology platform, strong customer adoption, and large market opportunity support the investment thesis.
Investors should be prepared for continued volatility, which is typical of growth stocks. However, SentinelOne’s strategic positioning in cybersecurity and compelling valuation make it an attractive option for those seeking exposure to the next generation of security solutions.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
