Both The Opportunity And Valuation At ANSYS Are Eye-Popping

I'm a big believer in paying for quality, but it's hard not to pause at the 12x-plus revenue and 39x-plus PE multiples on ANSYS (NASDAQ:ANSS) shares today. While ANSYS is an exceptional software company and is likely to see well-above-average revenue growth and operating margins over the next decade, it's tough to comfortably model the growth it will take to justify that level of expectation - that's not saying that ANSYS can't do it, but not many software companies have lived up to that level of expectation.

What should investors do with the stock, then? If you're a growth or momentum investor, you probably don't care that much about valuation anyway, so carry on with whatever metrics you like. If you're more value-conscious, though, the best I can offer now is to note that ANSYS shares have had relatively frequent double-digit pullbacks over the years, so there will likely be an opportunity to pay in at a slightly better price, though I'd never expect ANSYS to look conventionally "cheap" unless something went massively wrong in the economy and/or stock market.

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Both The Opportunity And Valuation At ANSYS Are Eye-Popping