Wondering if Innodata is still worth chasing after its huge run, or if the smart move now is to wait for a better entry point.
After a blistering multi year climb of around 1,758% over three years and 1,013% over five years, the stock is up 46.3% year to date but has cooled off lately with a 0.5% move over the last week and an 11.2% slide over the past month.
Recent enthusiasm has been driven by growing interest in AI data services and Innodata’s role as an infrastructure style pick for companies training large language models, which has put the stock on more institutional radars. At the same time, shifting risk appetite in the broader tech space and profit taking after a strong multi year run have added volatility to the share price.
Despite all that excitement, Innodata currently only scores 1 out of 6 on our valuation checks. The big question is whether traditional valuation methods are missing something that a more narrative driven approach can capture, which we will come back to at the end of this article.
Innodata scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
A Discounted Cash Flow model estimates what a business is worth by projecting its future cash flows and then discounting those back to today, to reflect risk and the time value of money.
For Innodata, the 2 Stage Free Cash Flow to Equity model starts with last twelve month free cash flow of about $39.24 million and projects how that cash flow could evolve over time. Analysts directly forecast free cash flow of $27.35 million in 2026. Beyond that point, Simply Wall St extrapolates a gradual decline in annual free cash flows through to 2035, with discounted values steadily tapering off each year.
When all of these projected and discounted cash flows are added together, the model arrives at an estimated intrinsic value of roughly $12.13 per share. Compared with the current share price, this implies the stock is about 376.2% above its DCF based fair value. This suggests investors are paying a large premium for future growth and AI optimism that the cash flow projections do not fully support.
Result: OVERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Innodata may be overvalued by 376.2%. Discover 907 undervalued stocks or create your own screener to find better value opportunities.
INOD Discounted Cash Flow as at Dec 2025
Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Innodata.
For profitable companies, the price to earnings ratio is often the most intuitive valuation yardstick because it directly compares what investors are paying today with the profits the business is already generating. In general, faster growth and lower perceived risk can justify a higher PE, while slower growth or higher risk usually limits what the market is willing to pay.
Innodata currently trades on about 54.7x earnings, which is well above both the Professional Services industry average of roughly 25.0x and the peer group average of about 38.6x. That premium reflects that the market is factoring in strong growth and a favorable AI narrative. To go a step further, Simply Wall St calculates a proprietary Fair Ratio of 24.5x, which represents the PE that might be expected given Innodata’s specific mix of earnings growth, margins, risk profile, size and industry.
This Fair Ratio is more tailored than a simple comparison with peers or the sector because it adjusts for company level fundamentals rather than assuming one size fits all. Comparing Innodata’s current 54.7x PE to the 24.5x Fair Ratio suggests the shares are trading at a substantial premium to what its fundamentals currently justify.
Result: OVERVALUED
NasdaqGM:INOD PE Ratio as at Dec 2025
PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1452 companies where insiders are betting big on explosive growth.
Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a simple way to connect your view of Innodata’s story with the numbers behind revenue, earnings, margins and ultimately fair value. A Narrative on Simply Wall St is your own structured storyline for a company, where you spell out what you think will drive the business, translate that into a financial forecast, and arrive at a fair value you can directly compare to today’s share price to decide whether to buy, hold, or sell. Narratives live inside the Community section of the platform used by millions of investors, and they update dynamically as new news, earnings or guidance come in, so your fair value view can evolve instead of staying stuck on a static model. For example, one Innodata Narrative might lean bullish, assuming robust AI adoption and a fair value near the recently lifted upper analyst target of about $75, while a more cautious Narrative might sit closer to the lower target around $55, reflecting concerns about client concentration and competition.
Do you think there’s more to the story for Innodata? Head over to our Community to see what others are saying!
NasdaqGM:INOD Community Fair Values as at Dec 2025
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.
Companies discussed in this article include INOD.
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