BENTLEY SYSTEMS, INCORPORATED (BSY): what the price requires
At today's price, BENTLEY SYSTEMS, INCORPORATED (BSY) is priced for today's economics sustained for ~5.8 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: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/BSY
Headline
| Field | Value |
|---|---|
| Ticker | BSY |
| Company | BENTLEY SYSTEMS, INCORPORATED |
| Current price | $31.63/sh |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 11.7% |
| Operating margin today | 26.7% |
| Margin compression implied | -15.0pp |
| Must persist for | 5.8y |
| Multiple paid | 27x operating income |
The operating-margin requirement is derived from the framework's value band at year 11, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 9.5% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~1.8 years.
How unusual the bet is: elevated
| Reference | Value |
|---|---|
| vs own history | +0.22σ |
| cohort percentile (of 177 peers) | 48 |
| sustained it ~5.8 years at this level | 29% |
| implied end-window share | 0% |
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.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 3.34x | 5 | expensive |
| Earnings | 2.96x | 5 | expensive |
| Relative | 1.17x | 5 | expensive |
| Growth | 0.78x | 3 | justifies |
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 8.3%); the inversion above states its own rate.
Per-Model Detail (n=18)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $45.53 | 0.69x | yes | FCF base $0.5B, growth 12% (input: historical growth), terminal g 4.0%, WACC 8.4%, 6yr projection |
| DCF Exit Multiple | Growth | $40.54 | 0.78x | yes | Exit EV/EBITDA: 26.8x / 28.8x / 30.8x (bear / base = today's held flat / bull), 6yr |
| Relative Valuation | Relative | $30.64 | 1.03x | yes | P/E 35x (static sector reference · 2026-04), scenarios: 28.9x / 35.0x / 41.1x (bear / base = reference held flat / bull), EV/EBITDA 25x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $9.47 | 3.34x | yes | BV/sh $3.81, ROE (TTM) 23.0%, ke 9.3% |
| Two-Stage Excess Return | Asset | $14.89 | 2.12x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $29.31 | 1.08x | yes | Rev $1.6B, growth 12% (input: historical growth; tapered), Terminal P/S: 5.4x / 6.5x / 7.7x (bear / base = today's held flat / bull, cap 12x) |
| Peter Lynch Fair Value | Relative | $17.09 | 1.85x | yes | EPS $0.87, growth 20% (input: historical EPS growth), PEG=1.84 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $4.17 | 7.59x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.25B × (1−21%) / WACC 8.4% → EPV (no growth) |
| Residual Income | Asset | $13.76 | 2.30x | yes | BV $3.81 + 5yr PV of (ROE (TTM) 23.0% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $8.63 | 3.67x | yes | √(22.5 × EPS $0.87 × BVPS $3.81) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $26.99 | 1.17x | yes | EBITDA $0.39B × sector EV/EBITDA 25.0x |
| FCF Yield | Earnings | $13.22 | 2.39x | yes | FCF $491.7M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $10.69 | 2.96x | yes | SBC-adj FCF $0.42B (FCF $0.49B − SBC $0.08B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $28.07 | 1.13x | yes | EPS $0.87 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $1.99 | 15.89x | yes | BV $3.81 × (ROIC 4.4% / WACC 8.4%) |
| P/Sales Sector | Relative | $38.66 | 0.82x | yes | Revenue $1.56B × sector P/S 8.0x |
| PEG Fair Value | Relative | $25.64 | 1.23x | yes | EPS $0.87 × (PEG 1.5 × growth 19.6% (input: historical EPS growth)) → PE 29.5x |
| Earnings Yield | Earnings | $9.41 | 3.36x | yes | EPS $0.87 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $1.0b |
| Net debt / NOPAT (after-tax) | 3.12x |
| Net debt / operating income (pre-tax) | 2.46x |
| Interest coverage | 30.3x |
| Share count CAGR (buyback) | -0.7% |
| Burning cash | no |
Bullet Takeaways
At about $29, Bentley trades near 26 times company-wide operating income. Inverted, the price asks the business to hold growth near its self-funding ceiling for roughly five years, a stretch that history says only about a third of comparable fast-growers sustained. The bar is in the duration, not the near-term rate.
The surprising part is the quality underneath that demanding price: a 29.8% operating margin, a 23% return on equity, and nearly $490 million of trailing free cash flow on $1.6 billion of revenue. This is a highly profitable software business, which is unusual for a name the model flags as elevated.
The recurring base is the anchor. Annualized recurring revenue reached about $1.49 billion, growing in the low teens, with dollar-based net retention near 109%. Net debt of roughly $1 billion is modest at about 2.7 times operating income and covered nearly 30 times by interest. The question the price poses is whether low-teens growth is enough to justify the multiple.
Bull Case
The counterintuitive fact about Bentley is how profitable it already is for a company the market prices as a growth story. The price embeds years of high growth, which usually means the underlying business is still burning cash to get there. Bentley is the opposite: it posted a 29.8% operating margin in the first quarter of 2026, a return on equity around 23%, and trailing free cash flow near $490 million on $1.6 billion of revenue. It is not promising future profitability, it is delivering it now. That changes the nature of the bet. You are not underwriting whether the company can ever make money, you are underwriting how long it can keep growing a business that already converts roughly a third of revenue to operating profit.
The recurring base is what makes that growth durable. Bentley sells infrastructure engineering software, the tools civil engineers use to design roads, bridges, rail, water systems, and the power grid, and it sells them as subscriptions to a sticky base of professional accounts. Annualized recurring revenue reached about $1.49 billion, up roughly 11.5% in constant currency, and dollar-based net retention of 109% means existing accounts spend more each year. The 10-K is candid that accounts "are not obligated to" keep renewing, but the retention figure shows they do, because the software is embedded in long-lived infrastructure projects that span years (FY2025 10-K, accession 0001031308-26-000007). Subscriptions are 93% of revenue, so the income is predictable, and the global push into resources, public works, and grid modernization gives the demand a long runway.
The optionality is the digital-twin and AI layer. Bentley acquired Cesium, a 3D geospatial company, and partnered with Google to bring real-world geospatial context into its models, and it added Talon Aerolytics and Pointivo in late 2025 to fold drone survey and AI damage-detection into asset analytics for telecom and utilities. These extend the platform from designing infrastructure to monitoring and maintaining it across its whole life, a larger and more recurring market. If that asset-analytics layer lifts the ARR growth rate even modestly above the current low teens, the duration the price requires becomes easier to clear. A profitable, cash-generative compounder with a sticky base, modest leverage, and a credible new growth vector is exactly the kind of business that can justify a premium multiple, provided the growth holds.
Bear Case
The truth a Bentley holder would rather not face is that the price assumes more growth than the business is currently producing. At about $29 (June 27, 2026) the stock trades near 26 times operating income, which inverts into an assumption that operating growth holds near its self-funding ceiling for roughly five years. But the company is growing annualized recurring revenue at only about 11.5% in constant currency, and guides full-year ARR growth to 10.5% to 12.5%. The price needs ceiling-rate growth sustained for years; the business is delivering low-teens growth that is gently decelerating. History says only about 32% of comparable fast-growers sustained the implied pace for five years, which is why the priced-in assumption reads as elevated rather than comfortable. This is a quality business, but quality at the wrong price is still a problem.
The margin direction is a quiet warning. Operating margin slipped to 29.8% from 31.1% a year earlier, and free cash flow fell to $187.9 million in the quarter from $216.4 million. Some of that is acquisition integration and investment, which the bull case frames as growth spending, but it also means the operating leverage the price assumes is not currently expanding, it is compressing. Net retention of 109% is solid but eased from 110%, another small step in the wrong direction. When a stock is priced for an exceptional multi-year run, every metric drifting slightly lower chips at the foundation the valuation rests on.
Then there is the structure and the static-method gap. Bentley is controlled by its founding family through a dual-class share structure, so outside holders have limited say over capital allocation and strategy. And the valuation methods that do not assume years of growth land far below the price: the earnings-power value near $4, the asset and excess-return reads in the high single digits to mid teens, against a price of $29. Only the relative-multiple and growth-DCF families reach the price, and they do so by extrapolating. The blended read across the applicable methods sits near $24, below the current price. The bet is narrow: that Bentley's low-teens growth proves durable for years and the asset-analytics expansion re-accelerates it. If growth fades toward high single digits or the margin keeps slipping, there is little in the current earnings base to support the multiple, and the family control limits the levers an outside shareholder could pull to fix it.
Valuation
Bentley is priced as a durable software compounder, and at about $29 the price equals roughly 26 times company-wide operating income. Inverting that under a fixed discount and fade assumption implies operating growth held near the self-funding ceiling for about five years. The near-term pace is within what the company has delivered; the demand is in the duration. Because Bentley is actually growing annualized recurring revenue only in the low teens, sustaining ceiling-rate growth for five years is a high bar, and history suggests only about a third of comparable fast-growers cleared it, which is why the implied assumption reads as elevated.
The method families split along the growth-versus-current-earnings line. The growth-DCF reads land above the price, near $46 on a perpetual-growth basis and $39 on an exit multiple, both crediting years of compounding. The relative-valuation read lands close to the price near $31, on a sector software multiple. Every method anchored in current, un-grown earnings lands well below: the earnings-power value near $4 because normalized operating income is far below the bull-case run rate, and the asset and excess-return methods in the high single digits to mid teens against a book value of about $3.81 per share. The blended read across applicable methods is roughly $24, below the current price.
The honest conclusion: this is a high-quality, highly cash-generative business trading at a premium that only the growth-crediting methods support. At 26 times operating income with a five-year implied horizon, the price already assumes Bentley's low-teens recurring growth proves durable and the digital-twin and asset-analytics push extends the runway. The 109% net retention, 93% subscription mix, and near-$490 million of free cash flow make that case plausible. But the margin slipped this quarter and growth is gently decelerating, so the margin for error is thin. If it fades toward high single digits, the current-earnings methods that sit far below the price become the more relevant guide.
Catalysts
The latest print was a beat with reaffirmed guidance. First-quarter 2026 revenue rose 14.5% to $424.2 million (11.9% in constant currency), subscriptions grew 14.7% to $392.5 million, and annualized recurring revenue reached $1,494.5 million, up about 11.5% in constant currency. Operating margin was 29.8%, net income was $95.4 million or $0.30 per diluted share, adjusted EPS was $0.38, and free cash flow was $187.9 million. Dollar-based net retention was 109%. (stocktitan, IndexBox) Management reaffirmed full-year 2026 guidance of $1,685 to $1,715 million in revenue and 10.5% to 12.5% ARR growth.
The strategic catalyst is the move from designing infrastructure to monitoring it. Bentley acquired Cesium, a 3D geospatial company, and partnered with Google to embed real-world geospatial context into its models. (Bentley) In December 2025 it closed Talon Aerolytics and the technology of Pointivo, adding drone survey, digital-twin, and AI damage-detection capabilities aimed at telecom and electric utilities, to support 5G and grid modernization. (ARC Advisory) Whether asset analytics lifts the ARR growth rate is the key swing factor.
Analyst sentiment is cautious-to-neutral. Goldman Sachs raised its target to $51 while keeping a Neutral rating, and several firms have trimmed fair-value estimates as they reset multiples. (Investing.com) The things to watch over the next few quarters: whether ARR growth holds in the low teens or re-accelerates with the asset-analytics products, whether the operating margin stabilizes after slipping this quarter, the integration of the recent acquisitions, and any commentary on how the founding family's dual-class control shapes capital allocation.
Peer Cohorts (Per Segment, With Filing Citations)
Bentley Systems (infrastructure engineering software) (reported)
- ADSK (AUTODESK, INC.)
- (no filing in the citation store)
- PTC (PTC Inc.)
- (no filing in the citation store)
- APPF (AppFolio, Inc.)
- (no filing in the citation store)
- GWRE (Guidewire Software, Inc.)
- (no filing in the citation store)
- AVPT (AvePoint, Inc.)
- (no filing in the citation store)
- CLBT (Cellebrite DI Ltd.)
- (no filing in the citation store)
- QTWO (Q2 Holdings, Inc.)
- (no filing in the citation store)
- GEN (Gen Digital Inc.)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
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.