Author: admin

• Wondering whether Nutanix’s current share price is a bargain or a warning sign? If you’re curious about the true value behind the ticker, you’re not alone.

• The stock recently tumbled, dropping 20% over the last week and over 30% in the past month. This could signal growing volatility or shifting market sentiment.

• Analysts and investors have been buzzing after Nutanix confirmed new technology partnerships and announced an expanded lineup of cloud solutions. These developments help explain some of the intense recent price movements. Market watchers are closely following how these changes may unlock further growth or introduce fresh risks.

• Our initial pass at valuation checks finds Nutanix scoring 3 out of 6. This suggests the company is undervalued by three measures but is not a simple story. Next, we’ll dig into how different valuation approaches view Nutanix, and why the best judgment might come from looking beyond just numbers.

Find out why Nutanix’s -27.5% return over the last year is lagging behind its peers.

A Discounted Cash Flow (DCF) model estimates a company’s true value by projecting its future free cash flows and discounting them back to today’s dollars. This approach helps investors understand what a business is fundamentally worth by focusing on its ability to generate cash over time.

For Nutanix, the latest report puts annual Free Cash Flow at $773.8 Million. Analysts forecast a steady climb in the coming years, with projected Free Cash Flow reaching $1.05 Billion by 2028. While only the first five years of estimates come directly from analysts, further projections through 2035 are extrapolated. This provides a longer-term perspective on the company’s earning power.

Based on this model, Nutanix’s intrinsic value comes out to $76.06 per share, which means the current share price is trading at a 36.4% discount. This suggests the market may be underestimating the company’s growth potential or overreacting to recent volatility.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Nutanix is undervalued by 36.4%. Track this in your watchlist or portfolio, or discover 926 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Nutanix.

For companies that are now profitable, the Price-to-Earnings (PE) ratio is one of the most fitting ways to compare valuation. This metric reveals how much investors are willing to pay for a dollar of current earnings, making it especially relevant for mature businesses generating consistent profits.

However, what counts as a “normal” or “fair” PE ratio varies widely. Factors such as future earnings growth, business risk, and the strength of a company’s profit margins all influence where this number should fall. Higher-growth and lower-risk companies often command higher PE multiples, while companies facing more uncertainty trade at lower ratios.

Nutanix’s current PE ratio stands at 59.35x, notably above the Software industry average of 29.19x and higher than its peer group, which sits at 37.96x. This might initially signal that the market expects Nutanix to continue delivering exceptional growth or that it is priced at a premium.

To help cut through the noise, Simply Wall St has developed the “Fair Ratio,” a proprietary benchmark for the PE multiple that weighs Nutanix’s individual characteristics including its growth outlook, profitability, risk profile, industry trends, and market capitalization. Unlike a broad comparison to the average peer or sector, the Fair Ratio offers a tailored reference point and reflects Nutanix’s unique position.

For Nutanix, the Fair Ratio is estimated at 47.71x. Since the company’s actual PE ratio is considerably higher, the stock appears to be trading above what its fundamentals might justify, even after accounting for its favorable characteristics.

Result: OVERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1434 companies where insiders are betting big on explosive growth.

Earlier we mentioned that there’s an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is your personal investment “story” for a company—your view of its future, paired with the numbers you believe matter most, such as fair value, future revenue, earnings, and profit margins. Narratives connect what’s happening at Nutanix to a real financial forecast, providing a clear link between events, price targets, and the company’s long-term outlook.

On Simply Wall St’s Community page, Narratives are an easy-to-use tool trusted by millions of investors to express their outlook, compare it to others, and make smarter decisions. They help you decide when to buy or sell by matching your estimated fair value (and what you see as likely business outcomes) against today’s share price, without the need for complicated models or spreadsheets.

Because Narratives update dynamically with every new earnings report, news headline, or partnership announcement, your perspective always stays relevant. For example, some investors currently believe Nutanix deserves a price as high as $95 based on dominant AI-driven growth and expanding market share, while the most skeptical peg fair value closer to $71 due to margin pressure and competitive headwinds. Your Narrative can reflect your own logic and help you act confidently, even when the market is divided.

Do you think there’s more to the story for Nutanix? Head over to our Community to see what others are saying!

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 NTNX.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com

Story Continues

Growth expectations and company risk both influence what investors consider a fair or normal P/S ratio. Businesses with stronger growth prospects or lower risk profiles often justify higher P/S multiples. Slower growers or riskier firms typically trade at lower multiples.

Currently, Primo Brands trades at a P/S ratio of 0.89x. This is significantly lower than both the beverage industry average of 2.27x and the peer group’s average of 3.66x.

Simply Wall St’s proprietary “Fair Ratio” goes beyond simple averages and provides a tailored benchmark based on factors such as Primo Brands’ growth outlook, risk profile, profit margin, industry, and market capitalization. For Primo Brands, the Fair Ratio is calculated at 1.05x. This is a more holistic, company-specific measure and can offer a more relevant benchmark than broad industry or peer comparisons since it incorporates the nuances that matter most to investors.

With Primo Brands’ actual P/S ratio at 0.89x and the Fair Ratio at 1.05x, the difference suggests the stock is somewhat undervalued according to this approach.

Result: UNDERVALUED

PS ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1434 companies where insiders are betting big on explosive growth.

Earlier we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is simply your story behind the numbers. It is your personal perspective on where a company is headed, based on your assumptions about its future revenue, earnings, and margins. Narratives connect what you believe about a business with financial forecasts and translate your story into an estimated fair value for the stock.

On Simply Wall St’s Community page, investors can easily build and share Narratives in just a few minutes. This is an accessible, dynamic tool trusted by millions. Comparing your Narrative’s fair value to the current share price can help you decide whether it is time to buy or sell, bringing your conviction to real investment actions.

Narratives are continuously updated as news or fresh earnings reports emerge, keeping your view aligned with the latest information. For example, one investor might see Primo Brands as worth $45 per share due to caution about growth, while another’s Narrative values it at $75 based on optimism about new partnerships. Narratives let you bring your own outlook into the investing process and join the community conversation with confidence.

Do you think there’s more to the story for Primo Brands? Head over to our Community to see what others are saying!

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 PRMB.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com

A key regulatory measure to safeguard insurers’ solvency is the implementation of a risk-based solvency (RBS) regime. Such a regime is designed to incentivise insurers to hold sufficient capital to cover their risks, enabling them to meet their obligations to policyholders, even in adverse circumstances. Transitioning to an RBS regime represents a significant undertaking, involving comprehensive regulatory reforms, extensive training and capacity-building for both supervisors and industry, effective project planning and continuous engagement with stakeholders.

Many emerging market and developing economies are embarking on this journey, which often spans several years. Against this backdrop, the International Association of Insurance Supervisors (IAIS) published the Guidance on transitioning to a risk-based solvency (RBS) regime to provide a structured roadmap for supervisors and policymakers to establish a robust RBS regime.

What is an RBS regime?

An RBS regime is a regulatory framework that requires insurers to maintain a sufficient level of capital that is proportionate to cover their risk profiles and withstand financial difficulties, supported by a sound corporate governance framework. An RBS regime is composed of three types of key elements:

	Quantitative elements: These elements include valuation methodologies for assets and liabilities, treatment of investments, the calculation of capital requirements, recognition of capital resources and the resulting solvency ratio.
	Qualitative elements: These elements focus on the governance frameworks in insurers, including oversight roles and responsibilities, and governance structures such as the risk management system, internal control system and control functions.
	Reporting and disclosure elements: These elements encompass supervisory reporting and public disclosure requirements of both quantitative and qualitative information.

An RBS regime can take many forms, involving different combinations of these elements and varying in complexity. The final form of an RBS regime will depend on the characteristics of the jurisdiction, such as its economic activity and conditions, the development of financial markets, demographics and culture, the size and sophistication of its insurance sector, and the technical capacity of the supervisor.

Benefits and challenges of transitioning to an RBS regime

Supervisory authorities may choose to transition to an RBS regime for several reasons. Such a framework can enhance the protection of policyholders by providing supervisors with a deeper understanding of insurers’ business models and risk profiles. It also supports the development of insurance markets through proportional application of regulatory requirements based on the size and complexity of insurers, allowing new entrants to gradually meet requirements as they grow. Additionally, an RBS regime contributes to financial stability when insurers hold sufficient capital relative to their risks, enabling early risk identification and mitigation to prevent the build-up of systemic risk. Finally, aligning with international standards and best practices helps position a jurisdiction as an attractive and secure environment for international insurers.

Implementing an RBS regime involves significant challenges. These include high implementation costs, such as IT upgrades, developing actuarial expertise, training and the development of robust data management systems. It also requires cultural shifts within supervisory authorities and the insurance sector, fostering a risk-based mindset and aligning practices with the new regulatory framework. Additionally, supervisors and insurers may need time to adjust their governance and organisational structures.

Key considerations for transition

Transitioning to an RBS regime is a significant step that requires a long-term perspective. The complexity of an RBS regime should align with a jurisdiction’s characteristics. In some cases, other market development initiatives may take priority. The following are key considerations when transitioning to an RBS regime:

• Tailoring to the jurisdictional context – Transition strategies should reflect economic conditions, market maturity, demographic and cultural factors, and the sophistication of the insurance sector and the technical capacity of the supervisor.
• Long-term project planning – Implementing RBS typically spans medium- to long-term horizons. Careful planning, strong governance, transparent timelines, sound project risk assessment and management, and clear communication plans are recommended.
• Implementation approaches – There are multiple ways to structure the implementation of an RBS regime. Jurisdictions may choose a conceptually led approach, where the initial consultation focuses on the objectives and design of the regime, or a legislation-led approach, where the legal framework is established first and technical details are added later. Jurisdictions will also have to decide to adopt a phased approach, where components of the RBS regime are introduced gradually (eg starting with qualitative elements like governance, followed by quantitative requirements), or an approach where all elements are implemented simultaneously.
• Capacity-building – Investment in human resources, particularly actuaries, risk managers and IT professionals, is critical. Supervisors should also build internal expertise to oversee RBS processes effectively.
• Stakeholder engagement – Engaging insurers, government bodies and other stakeholders through consultations, field testing and workshops can provide transparency, buy-in and smooth implementation.

Practical aspects of RBS regime implementation

Implementing an RBS regime begins with careful scoping, securing endorsement from supervisory leaders and governments, and establishing dedicated teams and governance structures to manage the transition. A comprehensive project plan defines rules of conduct, milestones, communication strategies and risk management processes. Key design choices, such as whether to legislate early or later and whether to phase in reforms or adopt a comprehensive rollout, shape the pace of implementation. Stakeholder engagement, particularly with the insurance industry, is critical: insurers contribute data, participate in consultations and support field testing, which validates design decisions and ensures the readiness of systems before full adoption.

The transition often requires legislative reforms across multiple policy domains and a cultural shift among supervisors and insurers towards proactive, risk-based thinking. Jurisdictional experiences show that implementation generally takes five to 10 years or more, with success depending on sustained political support, transparent communication and a pragmatic balance between ambition and market realities.

Technical aspects of RBS regime implementation

The technical foundation of an RBS regime lies in building a coherent solvency framework that balances international standards with local realities. Central to this is the total balance sheet approach, which requires supervisors to specify valuation approaches, define qualifying capital resources and establish capital requirements anchored in prescribed and minimum capital requirement control levels to ensure adequate policyholder protection. These quantitative rules are complemented by qualitative requirements, such as governance, enterprise risk management and own risk and solvency assessment, that enable insurers to identify, measure and manage risks effectively. Disclosure requirements further enhance transparency and promote market discipline.

Technical design involves key decisions, including whether to base valuation on financial reporting standards, like International Financial Reporting Standard 17 – Insurance Contracts, or develop bespoke solvency balance sheets; how to calibrate capital charges for insurance, market, credit and operational risks; and how to aggregate them consistently. Proportionality is critical, particularly for emerging market economies, where simplified approaches, phased calibration and transition periods may be necessary to maintain credibility without undermining market growth.