QUALYS, INC. (QLYS): what the price requires
At today's price, QUALYS, INC. (QLYS) is priced for +18.6% growth. 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/QLYS
Headline
| Field | Value |
|---|---|
| Ticker | QLYS |
| Company | QUALYS, INC. |
| Current price | $151.94/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 | 9.5% |
| Operating margin today | 33.5% |
| Margin compression implied | -24.0pp |
| Implied growth | 18.6% |
| Multiple paid | 22x operating income |
The operating-margin requirement is derived from the framework's value band at year 10, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 9.6% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~5.6pp.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | -0.54σ |
| cohort percentile (of 177 peers) | 39 |
| sustained it ~5 years at this level | 45% |
| 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 | 2.49x | 5 | expensive |
| Earnings | 2.20x | 5 | expensive |
| Relative | 0.99x | 5 | justifies |
| Growth | 0.83x | 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 9.1%); the inversion above states its own rate.
Per-Model Detail (n=18)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $210.22 | 0.72x | yes | FCF base $0.3B, growth 10% (input: historical growth), terminal g 4.0%, WACC 9.1%, 6yr projection |
| DCF Exit Multiple | Growth | $183.76 | 0.83x | yes | Exit EV/EBITDA: 20.5x / 22.5x / 24.5x (bear / base = today's held flat / bull), 6yr |
| Relative Valuation | Relative | $193.14 | 0.79x | yes | P/E 35x (static sector reference · 2026-04), scenarios: 29.2x / 35.0x / 40.8x (bear / base = reference held flat / bull), EV/EBITDA 25x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $61.03 | 2.49x | yes | BV/sh $15.97, ROE (TTM) 35.3%, ke 9.3% |
| Two-Stage Excess Return | Asset | $127.75 | 1.19x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $134.88 | 1.13x | yes | Rev $0.7B, growth 10% (input: historical growth; tapered), Terminal P/S: 6.6x / 7.9x / 9.2x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $77.92 | 1.95x | yes | EPS $5.57, growth 14% (input: historical EPS growth), PEG=1.92 (Overvalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $45.64 | 3.33x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $0.17B × (1−22%) / WACC 9.1% → EPV (no growth) |
| Residual Income | Asset | $95.22 | 1.60x | yes | BV $15.97 + 5yr PV of (ROE (TTM) 35.3% − Kₑ 9.3%) × BV; BV grows 8.8%/yr |
| Graham Number | Asset | $44.74 | 3.40x | yes | √(22.5 × EPS $5.57 × BVPS $15.97) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $168.58 | 0.90x | yes | EBITDA $0.23B × sector EV/EBITDA 25.0x |
| FCF Yield | Earnings | $92.55 | 1.64x | yes | FCF $290.5M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $69.07 | 2.20x | yes | SBC-adj FCF $0.21B (FCF $0.29B − SBC $0.08B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $170.30 | 0.89x | yes | EPS $5.57 × (8.5 + 2×14.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $20.32 | 7.48x | yes | BV $15.97 × (ROIC 11.6% / WACC 9.1%) |
| P/Sales Sector | Relative | $153.56 | 0.99x | yes | Revenue $0.68B × sector P/S 8.0x |
| PEG Fair Value | Relative | $116.89 | 1.30x | yes | EPS $5.57 × (PEG 1.5 × growth 14.0% (input: historical EPS growth)) → PE 21.0x |
| Earnings Yield | Earnings | $60.22 | 2.52x | yes | EPS $5.57 / 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 cash | $471.3m |
| Net debt / NOPAT (after-tax) | -2.70x (net cash) |
| Net debt / operating income (pre-tax) | -2.10x (net cash) |
| Share count CAGR (buyback) | -2.8% |
| Burning cash | no |
Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.
Bullet Takeaways
At $111.37 Qualys trades at roughly 15 times company-wide operating income, which implies operating profit growing about 9% a year for five years. For a software business that just grew revenue 10% and runs operating margins in the low thirties, that is within reach, not a stretch.
Unusually for a software name, the price sits below most of the growth and relative methods rather than above them. The perpetual-growth DCF lands near $212, relative valuation near $193, price-to-sales near $154, and the reasonable-value base case near $154, all above the $111 quote. Only the asset and pure earnings-floor methods sit below it.
The balance sheet is pristine: zero debt, net cash near $471 million, return on equity above 35%, and a shrinking share count. The debate is not financial health. It is whether a profitable but moderate-growth vulnerability-management vendor can hold its ground against larger security platforms expanding into its turf.
Bull Case
Start with how far the price sits below the methods, because that is the unusual feature here. For most profitable software names the price sits above the valuation methods; for Qualys it sits below the growth and relative families. The perpetual-growth DCF lands near $212 against a $111 price, relative valuation near $193, two-stage excess return near $128, and price-to-sales near $154. The model's reasonable-value band centers at about $154 base. The price-to-fair-value ratios across those methods run from roughly 0.5 to 0.75, meaning the market is paying about half to three-quarters of what the forward and peer-multiple methods support. A subscription security business is not usually on sale against its own growth math.
The operating record backs the multiple. First-quarter 2026 revenue was $175.6 million, up 10% year over year, ahead of estimates, and management raised full-year 2026 revenue guidance to a range of $721 million to $727 million, representing 8% to 9% growth. Non-GAAP earnings were $1.95 a share against a $1.80 estimate. This is a recurring-revenue model: the company describes growth coming "from our existing customers as they renew and purchase additional subscriptions, as well as from the addition of new customers to our cloud platform" (FY2024 10-K, accession 0001107843-25-000009). Net-expansion plus new logos on a cloud platform is exactly the durable engine that supports a 9% operating-growth assumption.
The economics are genuinely high quality. Trailing operating margin sits near 34%, return on equity above 35%, and the company carries no debt against net cash near $471 million, while buying back stock and shrinking the share count. Free cash flow near $290 million funds the repurchases without leverage. For the bull, the case is straightforward: a profitable, cash-generative security vendor trading below the central estimate of its own valuation methods, with a balance sheet that gives it complete strategic flexibility and a multiple that asks only for the mid-single-digit-to-low-double-digit growth it is already delivering.
Bear Case
The competitive disruption is the heart of the bear case, and the names matter before any multiple does. The vulnerability-management category Qualys helped define is being absorbed into broader security platforms. A direct peer's filing lays out the competitive set plainly, naming "CrowdStrike; public cloud vendors and companies, such as Palo Alto Networks and Wiz, that offer solutions for cloud security" alongside point-solution providers (Tenable FY2024 10-K, accession 0001660280-25-000034). When CrowdStrike bundles exposure management into its agent, when Palo Alto and Wiz fold cloud vulnerability scanning into their platforms, a standalone scanner faces a structural question: why buy the point product when the platform you already run includes it? Qualys's own filing warns that new product introductions and evolving standards "could create downward pressure on pricing and gross margins, and could adversely affect our renewal rates" (FY2024 10-K, accession 0001107843-25-000009). Renewal rates are the entire bull case, and they are what platform consolidation threatens.
The growth profile shows the squeeze. Revenue growth of 8% to 9% guided for 2026 is respectable but decelerating relative to the broader security market and well below the high-growth platform vendors taking share. The price implies about 9% operating-profit growth sustained for five years; that is within recent history, but the open question is durability, not the starting rate, and durability is exactly what a category under platform attack cannot promise.
The analyst split captures the disagreement. After the Q1 2026 print, RBC Capital raised its target to $90 with a Sector Perform rating, while JPMorgan cut its target to $87 from $113 with an Underweight rating. Both targets sit below the current $111 price. That is two desks, one neutral and one negative, telling you the stock is worth less than it trades for despite the beat. The conservative valuation methods agree: earnings power value lands near $46, the Graham number near $45, and simple excess return near $61, all far below the price. Strip out the assumption that the platform vendors leave Qualys's renewal base alone, and the support beneath the price thins quickly.
Valuation
Inverted, the price is undemanding for a software name. At $111.37 Qualys trades at roughly 15 times company-wide operating income, which solves to operating-profit growth of about 9% a year for five years at a 9.7% cost of capital. Each one-point change in the cost of capital moves the implied growth rate about five points. Against the company's own history, a 9% pace is within what it has recently delivered, so the priced-in assumption reads as within range.
The method families split, but unusually the price sits below the optimistic ones. The forward-growth family reaches well above it: perpetual-growth DCF near $212, exit-multiple DCF near $149, discounted-future-market-cap near $99. The relative family also sits above: sector P/E value near $193, EV/EBITDA near $169, price-to-sales near $154. The asset and pure earnings-floor methods sit below: earnings power value near $46, Graham number near $45, simple excess return near $61. The blended central estimate that survives the screen is about $138, above the price, and the reasonable-growth band runs from about $126 at the low to $154 at the base.
The reconciliation: the growth-DCF and relative methods justify the price (indeed they sit above it), while the asset and earnings-floor methods say the price is expensive against book value and a zero-growth earnings stream. For a high-margin, capital-light software business, the asset and zero-growth methods are the wrong anchor, which is why the price-to-fair-value pattern tilts toward undervaluation on the relevant families. The balance sheet removes any solvency overlay: zero debt, net cash near $471 million, and free cash flow near $290 million. The real uncertainty is competitive, not financial, and the valuation question is whether the 9% growth assumption holds as security platforms consolidate the category.
Catalysts
The most recent catalyst was the first-quarter 2026 report on May 5, 2026: revenue of $175.6 million, up 10% year over year and ahead of estimates, with non-GAAP earnings of $1.95 a share against a $1.80 estimate. Management raised full-year 2026 revenue guidance to $721 million to $727 million (8% to 9% growth) and lifted non-GAAP EPS guidance to a $7.44 to $7.65 range.
Analyst sentiment is the swing factor to watch and it is currently split. RBC Capital raised its price target to $90 while keeping a Sector Perform rating; JPMorgan cut its target to $87 from $113 with an Underweight rating. Both sit below the current price, so the market is weighing the beat against a more cautious medium-term view. Subsequent quarters' read on net revenue retention and new-customer additions will decide which view prevails.
The structural catalyst is competitive: how aggressively CrowdStrike, Palo Alto Networks, and Wiz fold vulnerability and exposure management into their platforms, and whether that pressures Qualys's renewal rates and pricing. Continued buybacks, funded by net cash and free cash flow, are the offsetting positive worth tracking each quarter.
Sources: Qualys Q1 2026 results (PR Newswire, Investing.com, The Motley Fool, stocktitan.net), RBC and JPMorgan analyst actions.
Peer Cohorts (Per Segment, With Filing Citations)
Qualys (single segment) (reported)
- TENB (TENABLE HOLDINGS, INC.)
- (no filing in the citation store)
- ZS (Zscaler Inc)
- (no filing in the citation store)
- S (SentinelOne Inc)
- (no filing in the citation store)
- CRWD (CrowdStrike Holdings Inc)
- (no filing in the citation store)
- VRNS (VARONIS SYSTEMS, INC.)
- (no filing in the citation store)
- OKTA (Okta Inc)
- (no filing in the citation store)
- PANW (Palo Alto Networks Inc)
- (no filing in the citation store)
- FTNT (Fortinet 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.