Clearwater Analytics Holdings, Inc. (CWAN): what the price requires
At today's price, Clearwater Analytics Holdings, Inc. (CWAN) is priced for today's economics sustained for ~30.1 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/CWAN
Headline
| Field | Value |
|---|---|
| Ticker | CWAN |
| Company | Clearwater Analytics Holdings, Inc. |
| Current price | $24.56/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 today | 1.1% |
| Must persist for | 30.1y |
| Multiple paid | 998x operating income |
Solve inputs: computed at a 8.7% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~3.5 years.
How unusual the bet is: high
| Reference | Value |
|---|---|
| vs own history | +2.45σ |
| sustained it ~10 years at this level | 15% |
| 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 | 3.73x | 2 | expensive |
| Earnings | 8.41x | 1 | expensive |
| Relative | 1.10x | 2 | expensive |
| Growth | 0.91x | 4 | 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 8.7%); the inversion above states its own rate.
Per-Model Detail (n=9)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $22.13 | 1.11x | yes | FCF base $0.2B, growth 25% (input: historical growth), terminal g 4.0%, WACC 8.7%, 7yr projection |
| DCF Exit Multiple | Growth | $29.44 | 0.83x | yes | Exit EV/EBITDA: 334.8x / 337.8x / 340.8x (bear / base = today's held flat / bull), 7yr |
| Relative Valuation | Relative | $22.39 | 1.10x | yes | P/S fallback (negative EPS): Sector P/S 8.0x × TTM revenue — excluded from consensus |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $6.95 | 3.53x | yes | Book value floor: BV/sh $6.95, ROE negative |
| Two-Stage Excess Return | Asset | $6.25 | 3.93x | yes | Book value with convergence: BV/sh $6.95, ROE converges to ke |
| Discounted Future Market Cap | Growth | $35.64 | 0.69x | yes | Rev $0.8B, growth 30% (input: historical growth; tapered), Terminal P/S: 7.0x / 8.8x / 10.5x (bear / base = today's held flat / bull, cap 12x) |
| Peter Lynch Fair Value | Relative | $0.00 | — | no | Negative/zero EPS — earnings-based value floored at $0 |
| Margin Trajectory | Growth | $24.87 | 0.99x | yes | Margin ramp: -6% → 22% over 7yr, rev growth 30% (input: historical growth; tapered) |
| Earnings Power Value | Earnings | $0.01 | 2456.00x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.00B × (1−21%) / WACC 8.7% → EPV (no growth) (excluded from median) |
| Residual Income | Asset | — | — | no | — |
| Graham Number | Asset | — | — | no | — |
| EV/EBITDA Relative | Relative | $0.01 | 2456.00x | yes | EBITDA $0.02B × sector EV/EBITDA 25.0x (excluded from median) |
| FCF Yield | Earnings | $2.92 | 8.41x | yes | FCF $152.5M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $0.01 | 2456.00x | yes | SBC-adj FCF $0.02B (FCF $0.15B − SBC $0.13B) capitalized at Kₑ (excluded from median) |
| Ben Graham Formula | Earnings | — | — | no | — |
| ROIC-Justified P/B | Asset | $0.20 | 122.80x | yes | BV $6.95 × (ROIC 0.3% / WACC 8.7%) (excluded from median) |
| P/Sales Sector | Relative | $22.39 | 1.10x | yes | Revenue $0.83B × sector P/S 8.0x |
| PEG Fair Value | Relative | — | — | no | — |
| Earnings Yield | Earnings | — | — | no | — |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $732.9m |
| Net debt / NOPAT (after-tax) | 115.30x |
| Net debt / operating income (pre-tax) | 91.09x |
| Share count CAGR (dilution) | 4.5% |
| Burning cash | no |
Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.
Bullet Takeaways
- Clearwater Analytics has agreed to be taken private at $24.55 per share in cash by a Permira- and Warburg Pincus-led investor group, an approximately $8.4 billion deal that now anchors the stock; at $24.39 the price sits just below the agreed cash value.
- The underlying business is a fast-growing investment-accounting SaaS platform: Q1 2026 revenue rose 74% year over year to $221.2 million and annual recurring revenue grew 77% to $872 million, with the 10-K noting that because client assets are mostly low-volatility fixed income, recurring-revenue growth “is generally not attributable to the fluctuating market” value of those assets.
- The defining variable is no longer fundamentals but deal completion: the transaction requires a shareholder vote and regulatory approval and is expected to close in the first half of 2026, so the remaining risk is a deal break, not a re-rating.
Bull Case
The capital-allocation story here has been resolved by an acquirer, and that is the cleanest version of the bull case. Clearwater agreed in December 2025 to be acquired for $24.55 per share in cash by an investor group led by Permira and Warburg Pincus, with participation from Francisco Partners and Temasek, in a transaction valued at roughly $8.4 billion. The current price of $24.39 sits just below that agreed value, so a holder today is largely underwriting deal completion rather than betting on where a standalone Clearwater would trade. Sophisticated private-equity buyers, after diligence, valued the whole company at $24.55 a share; that is a market-clearing price set by parties with full access to the books.
What those buyers are paying for is a genuinely strong SaaS franchise, which explains why the deal materialized. In Q1 2026, revenue rose 74% year over year to $221.2 million and annual recurring revenue grew 77% to $872 million, helped by a full year of the Enfusion, Beacon, and Bistro acquisitions. The platform retained 97% of gross revenue and expanded existing accounts to a 108% net revenue retention rate, the hallmark of sticky, mission-critical software. The 10-K highlights an underappreciated quality: because client assets on the platform are mostly low-volatility fixed income, recurring-revenue growth “is generally not attributable to the fluctuating market” value of those assets, meaning the revenue base is more stable than an asset-linked model would suggest.
The third element is that the acquisition validates the strategy management laid out. The company noted that, a full year after acquiring Enfusion, Beacon, and Bistro, it is seeing clear validation of the strategic rationale for those deals, and the take-private offer is the market's endorsement of that integrated platform. For a shareholder, the practical bull case is straightforward: a defined cash outcome at a premium to where the stock traded before the announcement, backed by buyers who concluded the assembled business is worth $8.4 billion.
Bear Case
The honest bear case for a stock sitting on an announced cash deal is not about valuation; it is about completion. At $24.39 against a $24.55 offer, the small remaining spread is the market's collective estimate of the probability and timing of the deal closing. The transaction still requires approval by Clearwater's stockholders, including a majority of disinterested shares, and regulatory clearances, and is expected to close in the first half of 2026. Any deal can break: a regulator can object, a financing condition can fail, or a material adverse change can give the buyers an exit. If the deal collapses, the downside is not to the offer price but to wherever a standalone Clearwater would trade, and the valuation methods give a clear warning about that floor.
That floor is the second concern, and it is where the model disagreement matters. Strip away the deal and look at how the methods value the business on its own: only the relative-multiple lens, anchored on a roughly 8-times sales multiple, and the growth-oriented cash-flow methods reach the current price. The asset-based and earnings-power methods land far below, because Clearwater's GAAP operating margin is essentially breakeven, near negative on a trailing basis, with reported earnings consumed by stock-based compensation. The company generates real free cash flow, about $152 million, but its reported operating income is near zero, so any valuation lens that requires demonstrated GAAP profit calls the price expensive. Without the deal, the stock would be a high-multiple, not-yet-GAAP-profitable software name in a market that has repriced exactly those.
The third risk is dilution and the cost of the growth itself, which would matter again only if the deal fails. The share count has been rising about 4.5% a year, and the gap between roughly $152 million of free cash flow and near-zero operating income is bridged largely by stock-based compensation, a real cost to shareholders. In a standalone scenario, that combination of dilution, breakeven GAAP earnings, and a rich multiple is precisely what a skeptic would point to. The deal protects holders from that scenario; a deal break exposes them to it.
Valuation
Valuation for Clearwater is now governed by an announced transaction rather than by a standalone model. The agreed price is $24.55 per share in cash, and the stock at $24.39 trades just under it, a narrow spread that reflects the time value and the residual risk of the deal not closing in the first half of 2026. For practical purposes, the deal price is the valuation, and the methods below describe what a buyer would be exposed to if the transaction were not in place.
On a standalone basis, the methods used to triangulate split sharply, and the split is instructive about the floor. The relative-multiple lens, working off sales because trailing GAAP earnings are negative, lands right around the current price at a roughly 8-times sales multiple, and a margin-ramp model that credits the business scaling toward profitability over several years also lands near it. But the asset-based and earnings-power methods sit far below, because there is essentially no GAAP operating income to capitalize: trailing operating margin is around breakeven, and reported profit is consumed by stock-based compensation. The implied figures that come from inverting a near-zero earnings base are not meaningful and should be read as the mechanical artifact of dividing a price by almost nothing, not as a real multiple. The substance is simpler: this is a high-growth, not-yet-GAAP-profitable software business whose standalone value rests entirely on its forward trajectory.
Solvency cannot be assessed through the usual coverage and leverage lenses, and the data itself flags this: with operating profit near zero and no demonstrated through-cycle margin, interest coverage and years-to-repay cannot be computed honestly. The company carries net debt of roughly $733 million and generates about $152 million of free cash flow, so it funds itself, but the balance-sheet question is largely academic given the pending acquisition, which will recapitalize the company under private ownership. The decisive variable for a holder at $24.39 is not what Clearwater is worth, but whether the $24.55 cash deal closes on schedule.
Catalysts
The dominant catalyst is the take-private transaction. On December 21, 2025, Clearwater agreed to be acquired for $24.55 per share in cash by an investor group led by Permira and Warburg Pincus, with support from Francisco Partners and participation from Temasek, in a deal valued at approximately $8.4 billion. The agreement included a go-shop period that ended January 23, 2026, during which the company could solicit alternative proposals, and the transaction is expected to close in the first half of 2026, subject to a shareholder vote, including a majority of disinterested shares, and regulatory approvals. As a result of the agreement, the company has withdrawn forward-looking guidance.
The Q1 2026 print, reported May 7, 2026, showed the business strength that drew the buyers. Revenue rose 74% year over year to $221.2 million and annual recurring revenue grew 77% to $872 million, with gross revenue retention of 97% and net revenue retention of 108%. The results reflected a full year of the Enfusion, Beacon, and Bistro acquisitions, which management said validated the strategic rationale behind those deals; the company's adjusted EBITDA figure cited alongside these results is a company-defined non-GAAP measure, distinct from its near-breakeven GAAP operating income.
For a holder, the watch items are entirely deal-related: the shareholder vote, regulatory clearances, and the closing timeline through the first half of 2026. Because the price already reflects the agreed $24.55 cash value, ordinary operating catalysts no longer move the stock the way they would for a standalone company; the binary that matters is whether the acquisition completes as agreed or breaks, in which case the standalone fundamentals would reassert themselves.
Peer Cohorts (Per Segment, With Filing Citations)
Investment data aggregation, accounting, analytics & reporting (single operating segment) (reported)
- SSNC (SS&C TECHNOLOGIES HOLDINGS, INC.)
- (no filing in the citation store)
- FDS (FACTSET RESEARCH SYSTEMS INC.)
- (no filing in the citation store)
- INTA (Intapp, Inc.)
- (no filing in the citation store)
- ALKT (ALKAMI TECHNOLOGY, INC.)
- (no filing in the citation store)
- VERX (Vertex, Inc.)
- (no filing in the citation store)
- GWRE (Guidewire Software, 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.
Sources
company merger announcement, December 2025 · Clearwater Analytics Q1 2026 financial results, May 2026