Freshworks Inc.
Freshworks Inc. Fundamental Analysis
Freshworks Inc. (FRSH) shows strong financial fundamentals with a PE ratio of 11.99, profit margin of 21.90%, and ROE of 18.70%. The company generates $0.9B in annual revenue with strong year-over-year growth of 20.79%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 84.4/100 based on profitability, valuation, growth, and balance sheet metrics. The B+ grade reflects solid fundamentals with room for improvement in valuation or growth.
Fundamental Health Score
We analyze FRSH's fundamental strength across five key dimensions:
Efficiency Score
ExcellentFRSH demonstrates superior asset utilization.
Valuation Score
ExcellentFRSH trades at attractive valuation levels.
Growth Score
ExcellentFRSH delivers strong and consistent growth momentum.
Financial Health Score
ExcellentFRSH maintains a strong and stable balance sheet.
Profitability Score
ExcellentFRSH achieves industry-leading margins.
Key Financial Metrics
Is FRSH Expensive or Cheap?
P/E Ratio
FRSH trades at 11.99 times earnings. This suggests potential undervaluation.
PEG Ratio
When adjusting for growth, FRSH's PEG of 0.02 indicates potential undervaluation.
Price to Book
The market values Freshworks Inc. at 2.13 times its book value. This may indicate undervaluation.
EV/EBITDA
Enterprise value stands at 53.41 times EBITDA. This signals the market has high growth expectations.
How Well Does FRSH Make Money?
Net Profit Margin
For every $100 in sales, Freshworks Inc. keeps $21.90 as profit after all expenses.
Operating Margin
Core operations generate 1.57 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $18.70 in profit for every $100 of shareholder equity.
ROA
Freshworks Inc. generates $11.46 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
Freshworks Inc. generates strong operating cash flow of $258.61M, reflecting robust business health.
Free Cash Flow
Freshworks Inc. generates strong free cash flow of $260.41M, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $0.89 in free cash annually.
FCF Yield
FRSH converts 11.11% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
11.99
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
0.02
vs 25 benchmark
P/B Ratio
Price to book value ratio
2.13
vs 25 benchmark
P/S Ratio
Price to sales ratio
2.71
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
0.06
vs 25 benchmark
Current Ratio
Current assets to current liabilities
2.14
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.19
vs 25 benchmark
ROA
Return on assets percentage
0.11
vs 25 benchmark
ROCE
Return on capital employed
0.01
vs 25 benchmark
How FRSH Stacks Against Its Sector Peers
| Metric | FRSH Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 11.99 | 35.80 | Better (Cheaper) |
| ROE | 18.70% | 1167.00% | Weak |
| Net Margin | 21.90% | -134775.00% (disorted) | Strong |
| Debt/Equity | 0.06 | 0.46 | Strong (Low Leverage) |
| Current Ratio | 2.14 | 4.81 | Strong Liquidity |
| ROA | 11.46% | -312760.00% (disorted) | Strong |
FRSH outperforms its industry in 5 out of 6 key metrics, particularly excelling in Net Margin, but lagging in ROE.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews Freshworks Inc.'s 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
-34.86%
Industry Style: Growth, Innovation, High Beta
DecliningEPS CAGR
52.24%
Industry Style: Growth, Innovation, High Beta
High GrowthFCF CAGR
406.71%
Industry Style: Growth, Innovation, High Beta
High Growth