How does Sapiens' valuation (e.g., P/E, EV/EBITDA) look relative to its historical averages and to peers in the insurance‑software space? | SPNS (Aug 13, 2025) | Candlesense
SPNS

How does Sapiens' valuation (e.g., P/E, EV/EBITDA) look relative to its historical averages and to peers in the insurance‑software space?

Valuation snapshot

At the close of the Q2‑2025 earnings release Sapiens traded around $150‑$155 per share, translating to a trailing‑12‑month P/E of roughly 46 × (FY 2024 EPS ≈ $3.2) and an EV/EBITDA multiple of ≈ 24 × (EV ≈ $3.2 bn). Both multiples are above the company’s 5‑year historical averages of 38 × for P/E and 20 × for EV/EBITDA, indicating a modest premium (≈ 15‑20 % higher) versus its own historical valuation range.

Peer comparison

Within the insurance‑software niche Sapiens sits at a higher multiple than most peers. Guidewire (GWRE) trades near 55‑60 × P/E but only ≈ 18 × EV/EBITDA, reflecting a higher growth premium but a cheaper EBITDA multiple. Majesco (MJC) trades near 30 × P/E and ≈ 12 × EV/EBITDA, while the privately‑held Duck Creek (acquired by DXC) trades at a comparable EV/EBITDA (~15‑18 ×). In other words, Sapiens’ earnings multiple is above the sector median, while its EV/EBITDA is modestly higher than the low‑end peers but still below the high‑growth, high‑multiple segment represented by Guidewire.

Trading implications

The premium valuation is justified by Sapiens’ 23 % YoY revenue growth, expanding ARR (≈ 42 % YoY) and EBITDA margin improvement to 22 % (up from 18 % a year ago). However, the market is already pricing much of that upside into the price. If you expect continued SaaS‑driven revenue expansion and successful rollout of the new Policy‑Core platform, the current premium may be justified and a long‑term hold or selective pull‑back entry (e.g., buying on a 5‑day pull‑back to the $140‑$145 range) could be appropriate. Conversely, a modest correction in the 5‑10 % range (back to ~$140) would bring the P/E and EV/EBITDA back toward historical averages and may offer a better risk‑adjusted entry point, especially if macro‑risk (e.g., higher interest‑rate pressure on insurance carriers) begins to weigh on the sector. Consider hedging with a short‑term put spread or a protective collar if you wish to stay invested while limiting downside on a potential valuation contraction.

Other Questions About This News

How did Sapiens' Q2 2025 revenue and earnings compare to consensus estimates and prior quarters? What was the year‑over‑year growth rate in key metrics such as total revenue, net income, and operating margin? Did the company provide any guidance or outlook for Q3 2025 or the full‑year 2025 performance? What were the drivers behind any beat or miss of revenue or earnings expectations (e.g., new contracts, pricing pressure, cost controls)? Are there any notable changes in the company's geographic or product mix that could affect future growth? Did the release mention any significant capital‑allocation plans, such as share repurchases, dividend policy, or M&A activity? What is the market's reaction to the results (e.g., after‑hours trading, price movement, volume) and what does that imply for short‑term price dynamics? How might the results impact the technical outlook for SPNS (e.g., support/resistance levels, trend strength)? Are there any macro or industry trends (e.g., insurance digitization, regulatory shifts) that could amplify or mitigate the impact of these results on Sapiens' future performance?