PTC Inc (PTC)

Conclusion

PTC Inc sells software for product development, including Windchill for product lifecycle management, Creo for 3D design, ThingWorx and Kepware for industrial connectivity, and Onshape as a cloud design platform. At 195.87 USD on 9 November 2026, the market capitalisation is 21.3 billion USD.

The verdict is fair. The fair value band runs from 172.57 to 258.86 USD with a midpoint of 215.71 USD, giving a margin of safety of 10.1%. Today's P/E of 20.6 compares with a ten-year median of 68.5, and price to free cash flow of 24.4 compares with 38.8. The DCF gives 119.49 USD per share, and the fair value from historical multiples is 311.94 USD. The reverse DCF implies growth of 13.8% a year, against revenue growth of 8.6% and free cash flow per share growth of 7.0% over the last five years.

What holds the case up is operating margin of 32.8% against a ten-year median of 21.5%, free cash flow conversion of 127.9% over five years, and seven earnings beats in eight quarters. What would break it is trailing free cash flow conversion of 84.5%, a Piotroski score of 5 out of 8, and next-year estimate revisions that point down, with two cuts and no raises in the last 30 days. Financial strength is grey because the debt and interest data needed to assess it are not available.

Financial health

Financial strength is grey because there is not enough data to assess it. The current ratio of 1.63 is the only figure assessed as good, and the quick ratio is also 1.63. Net debt to EBITDA, debt to equity and interest coverage are not available, because the company does not report its interest expense and its debt figure is missing from the data. The Altman Z-score is not available either, because its inputs are missing. The Altman model was designed for manufacturers, so it is only a rough guide for a software company. Insolvency risk is not assessable, because the figures the Ohlson model needs are not available.

Earnings quality

Earnings quality is green, supported by strong cash conversion and a falling share count. Free cash flow conversion is 84.5% on a trailing twelve-month basis and 127.9% over five years. The accrual ratio is 2.0%, and stock-based compensation is 9.2% of revenue, leaving free cash flow after stock-based compensation at 620.6 million USD. The five-year compound change in share count is -85.0%, which reads as buybacks. The Piotroski score is 5 out of 8 evaluable criteria, and the Beneish M-score is assessed as good, though no numeric value is given. The company beat earnings estimates in 7 of the last 8 quarters, with an average surprise of 25.6%. Estimate revisions are weaker: for the current year, one estimate rose and two fell in the last 30 days, and for next year, none rose and two fell.

Profitability

Profitability is green, with margins well above their ten-year medians. Gross margin is 83.3% against a median of 79.2%, operating margin is 32.8% against 21.5%, and net margin is 37.8% against 14.0%. Operating margin stability is 0.53. Return on invested capital for the latest year is not available, so it cannot be set against the cost of capital on that basis. The five-year median ROIC is 9.9%, against a WACC of 9.4%. The cost of debt of 6.9% is assumed rather than reported. On the DuPont split, the net margin is 37.8% and asset turnover is 0.41. Return on equity is not available, so the leverage contribution cannot be completed.

Growth

Growth is green. Revenue compound growth is 9.2% over three years, 8.6% over five and 9.1% over ten, and revenue grew in 9 of 10 comparable years. Earnings per share compound growth is 37.3% over three years and 6.8% over five. Free cash flow per share grew at 26.1% a year over three years, 7.0% over five and 2.1% over ten. The three-year figures are far above the five and ten-year figures, so the recent pace of per-share growth is not the long-run pattern.

Valuation

Valuation is yellow, because the verdict is neutral. The verdict is fair. The P/E of 20.6 is a premium of -69.9% against its ten-year median of 68.5, price to free cash flow of 24.4 is a premium of -37.2% against 38.8, and price to sales of 7.8 is a premium of -3.5% against 8.1. The DCF gives 119.49 USD per share at a discount rate of 9.45%, with the terminal value making up 55.6% of the result. The fair value from historical multiples is 311.94 USD. The fair value band runs from 172.57 to 258.86 USD with a midpoint of 215.71 USD, a margin of safety of 10.1% at a price of 195.87 USD. The reverse DCF implies growth of 13.8%, against revenue growth of 8.6% over five years. The free cash flow yield is 4.1%. The company pays no dividend.

Risks

The weakest numbers are trailing free cash flow conversion of 84.5%, which is well below its five-year level, the Piotroski score of 5 out of 8, and the negative next-year estimate revisions. If cash generation keeps trailing reported earnings, the fair value band would be harder to support. The DCF rests on fixed assumptions, including a 5% equity risk premium and capped growth, so it is an order-of-magnitude estimate rather than a price target. Debt, interest expense, return on invested capital, return on equity, the Altman Z-score and the Ohlson insolvency estimate are not available, so leverage and solvency cannot be confirmed. This analysis also has no debt maturity schedule and no revenue by segment.