ACI WORLDWIDE, INC. (ACIW): what the price requires

At today's price, ACI WORLDWIDE, INC. (ACIW) is priced for today's economics sustained for ~5.6 years. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.

Generated: 2026-07-19 · Source: https://boothcheck.com/report/ACIW

Headline

FieldValue
TickerACIW
CompanyACI WORLDWIDE, INC.
Current price$56.61/sh
CompositionBill Payments 46% / Merchant Payments 10% / Payments Intelligence 3% / Real-Time Payments 8% / Issuing and Acquiring 33%

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin needed12.6%
Operating margin today16.3%
Margin compression implied-3.7pp
Must persist for5.6y
Multiple paid23x operating income

The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.

Solve inputs: computed at a 10.2% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~1.7 years.

How unusual the bet is: elevated

ReferenceValue
vs own history-0.01σ
cohort percentile (of 178 peers)42
sustained it ~5.6 years at this level30%
implied end-window share0%

Valuation X-Ray

The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset2.22x5expensive
Earnings2.99x4expensive
Relative0.58x3justifies
Growth0.91x3justifies

Families that justify the price: Relative, Growth Families that call it expensive: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.2%); the inversion above states its own rate.

Per-Model Detail (n=15)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$72.670.78xyesFCF base $0.3B, growth 7% (input: historical growth), terminal g 4.0%, WACC 8.2%, 6yr projection
DCF Exit MultipleGrowth$62.460.91xyesExit EV/EBITDA: 13.3x / 15.3x / 17.3x (bear / base = today's held flat / bull), 6yr
Relative ValuationRelative$86.060.66xyesP/E 35x (static sector reference · 2026-04), scenarios: 29.2x / 35.0x / 40.8x (bear / base = reference held flat / bull), EV/EBITDA 25x
Simple DDMGrowth——no—
Two-Stage DDMGrowth——no—
Simple Excess ReturnAsset$21.662.61xyesBV/sh $14.59, ROE (TTM) 13.7%, ke 9.3%
Two-Stage Excess ReturnAsset$26.142.17xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$46.001.23xyesRev $1.8B, growth 7% (input: historical growth; tapered), Terminal P/S: 2.7x / 3.3x / 3.8x (bear / base = today's held flat / bull, cap 8x)
Growth-Adjusted P/ERelative——no—
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$17.003.33xyesNormalized EBIT (5y avg op income, one-time charges added back) $0.27B × (1−24%) / WACC 8.2% → EPV (no growth)
Residual IncomeAsset$27.032.09xyesBV $14.59 + 5yr PV of (ROE (TTM) 13.7% − Kₑ 9.3%) × BV; BV grows 8.8%/yr
Graham NumberAsset$25.502.22xyes√(22.5 × EPS $1.98 × BVPS $14.59) — Graham's conservative floor
EV/EBITDA RelativeRelative$96.870.58xyesEBITDA $0.43B × sector EV/EBITDA 25.0x
FCF YieldEarnings$24.062.35xyesFCF $295.1M / Kₑ 9.3% — zero-growth perpetuity
SBC-Adj FCF YieldEarnings$16.083.52xyesSBC-adj FCF $0.22B (FCF $0.30B − SBC $0.08B) capitalized at Kₑ
Ben Graham FormulaEarnings$1.6634.10xyesEPS $1.98 × (8.5 + 2×-5.0%) × (4.4 / 5.3%) (excluded from median)
ROIC-Justified P/BAsset$3.5216.08xyesBV $14.59 × (ROIC 2.0% / WACC 8.2%)
P/Sales SectorRelative$139.320.41xyesRevenue $1.79B × sector P/S 8.0x
PEG Fair ValueRelative——no—
Earnings YieldEarnings$21.412.64xyesEPS $1.98 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net debt$645.6m
Net debt / NOPAT (after-tax)3.05x
Net debt / operating income (pre-tax)2.32x
Interest coverage5.0x
Share count CAGR (buyback)-3.0%
Burning cashno

Bullet Takeaways

Bull Case

What the standard valuation lenses miss about ACI Worldwide is the difference between the revenue it books and the revenue it has already won. The static methods read trailing earnings and a trailing multiple; what they cannot see sits in the backlog. The company discloses that its committed backlog includes "deferred revenue and amounts that will be invoiced and recognized as revenue in future periods" plus "estimated future revenues from software license fees, maintenance fees, services fees, and SaaS and PaaS fees". For a business that processes the world's payment rails under multi-year contracts, that forward book is the real asset, and a snapshot of last year's net income systematically undersells it.

The second point is the mix shift toward recurring, higher-quality revenue. Adjusted for currency, total revenue grew $156.6 million, or 10%, in 2025, and the growth is concentrated in the software-as-a-service and recurring lines rather than one-time license deals. Recurring revenue carries lower volatility and higher lifetime value than the license business it is gradually replacing, so the same top-line growth is worth more each year as the composition improves. Real-time payments and merchant are the fastest-growing pieces, and they ride a secular tailwind: every market modernizing its payment infrastructure is a market that needs the software ACI sells.

The third leg is capital allocation that compounds the per-share math. ACI generated free cash flow in the hundreds of millions over the trailing year, carries manageable leverage at under two times operating income, and is steadily retiring stock, the share count has fallen about 3% a year, and management intends to direct 50% to 60% of operating cash flow to buybacks. Net debt of about $646 million against operating income near $329 million, with interest covered roughly six times over, is a balance sheet that funds both the SaaS transition and the buyback without strain. The bull case is that a recurring-revenue payments platform with a large forward book is being valued on its trailing income statement, and as the recurring mix keeps climbing and the share count keeps falling, the gap between accounting earnings and contracted economics closes in shareholders' favor.

Bear Case

The methods disagree about ACI Worldwide, and the conservative ones are usually the more honest read. The asset-value and earnings-power lenses both call the stock expensive: normalized on five-year average operating income, the earnings-power method lands well below the price, and the book-value-based methods say the same. Only the peer-multiple lens and a forward-growth model reach today's price. When the cheap-looking case depends on crediting the business with growth and a rich software multiple, while the methods grounded in what the company actually earns say it is dear, the burden of proof sits with the growth assumption, and that assumption is doing most of the lifting here.

The specific fragility is revenue recognition. ACI's own filing flags that "significant judgment is exercised by the Company in determining revenue recognition for these customer arrangements", and that the conclusions reached "can impact the allocation of the transaction price to each performance obligation and the timing of revenue recognition." License revenue can land in a quarter or shift to the next, which means reported growth is noisier than the underlying demand, and a strong print followed by a soft one can reflect contract timing rather than a change in the business. For a stock priced on durable compounding, lumpy recognition is a recurring source of the kind of disappointment that resets a growth multiple.

The competitive and credit picture rounds out the bear. ACI competes against far larger payments and software platforms with deeper balance sheets and broader product suites, and it sells partly through "unrelated distributors or sales agents", which adds a layer between the company and the end customer's creditworthiness and economics. Leverage is moderate, not alarming, net debt near two times operating income with coverage around six times, but the price already embeds roughly 20% company-wide operating growth sustained for years, and the historical record shows only about 43% of comparable fast-growers held that pace for five years. If recurring growth settles into the high single digits the company itself guides to rather than the low-twenties the price implies, the multiple compresses toward where the earnings-power methods, not the growth method, say the equity belongs.

Valuation

At $44.07 (June 27, 2026) the price is paying roughly 19 times company-wide operating income, and inverting that multiple gives the cleanest statement of the bet: it implies operating profit growing about 20% a year for five years. That pace is within what ACI has recently delivered, so the stretch is less the rate than its persistence; the historical base rate is that only about 43% of comparable fast-growers sustained that level for five years. The price is asking ACI to be in the half that keeps compounding.

The families of methods split on whether to believe it. The earnings-power lens, which capitalizes normalized operating income with no growth, lands far below the price, and the asset-value methods anchored on a book value near $14.59 a share do the same. The peer-multiple lens, applying the software sector's richer earnings and cash-flow multiples, reaches the price, and a growth-DCF that credits high-single-digit revenue growth supports it as well. So the disagreement is the familiar one for a profitable software compounder: the static methods see a payments company earning solid but unspectacular returns, and the forward methods see a recurring-revenue platform that deserves a software multiple. Which lens is right depends entirely on whether the recurring mix and ARR bookings keep climbing.

Solvency is the part that is not in question. Net debt of about $646 million sits at under two times operating income, interest is covered roughly six times over, the company is not burning cash, and the share count has fallen about 3% a year on consistent buybacks. That balance sheet removes financial risk from the equation and leaves the debate where it should be, on growth durability rather than survival. The decisive question for the price is not whether ACI can pay its bills, it is whether the high-single-digit revenue growth management guides to scales the recurring base fast enough to earn a multiple the trailing earnings do not yet justify.

Catalysts

The recent catalyst was a strong first quarter and a guidance raise. On May 7, 2026, ACI reported first-quarter revenue of $426 million, up 8% year on year, with recurring revenue up 10%, adjusted EBITDA up 12% to $105 million, and adjusted EPS up 20%. Management pointed to growth in real-time payments and merchant, a solid biller performance, and expanding ARR bookings tied to its cloud-native platform pipeline, and raised full-year 2026 guidance to revenue of $1.89 billion to $1.92 billion and adjusted EBITDA of $540 million to $555 million, framing high-single-digit growth for both.

The capital-return cadence is its own catalyst. The company repurchased 1.5 million shares for $65 million in the quarter and reiterated a plan to direct 50% to 60% of operating cash flow to buybacks. With a falling share count, the buyback is a steady tailwind to per-share results that compounds alongside the operating growth.

Sentiment is constructive: the consensus rating sits at Strong Buy across the covering analysts, with a median target meaningfully above the current price. The events that matter from here are the quarterly recurring-revenue and ARR-bookings prints, because those are what would confirm or undercut the growth-and-software-multiple thesis the price leans on, and because the timing of license recognition can make any single quarter look better or worse than the underlying trend.

Peer Cohorts (Per Segment, With Filing Citations)

Payment Software (reported)

Biller (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

Sources

Q1 2026 results, May 7, 2026 · company FY2026 guidance, 2026 · analyst consensus, May 2026

View the full interactive ACIW report on boothcheck