MNDY

We rate monday.com Ltd. (MNDY) as Avoid with a composite score of 38.4/100 at a current price of $75.40. The stock falls in the bottom quintile of our universe across key quantitative factors, and the multi-factor weakness suggests a high probability of continued underperformance.

The rating is primarily driven by strength in quality (59th percentile) and value (44th percentile), which together account for the majority of the composite score. Offsetting weakness in momentum (11th percentile) and stability (28th percentile) tempers our overall conviction. We assign a Narrow Moat rating (66/100), High uncertainty, and Standard capital allocation.

Key items to watch: momentum to confirm whether the current price trend has legs; sustainability of the current growth rate. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

monday.com Ltd. holds a top-quartile position (#0 of 50) within the Services sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 38.4/100 places it at rank #3747 in our full 7,333-stock universe. With a $11.5B market capitalization, monday.com Ltd. operates at meaningful scale within the Services sector, providing competitive advantages in distribution, procurement, and customer reach.

Revenue is growing at 33%, though momentum at the 11th percentile suggests the market has not yet fully recognized this trajectory. This potential disconnect between fundamental improvement and market recognition could represent an opportunity for patient investors if the growth trend persists.

The margin cascade tells an important story: gross margins of 89% (+29.8pp vs sector) narrow to operating margins of -2% (-5.7pp vs sector) and net margins of 3.3%, yielding a gross-to-net conversion rate of 4%. The significant margin erosion from gross to net suggests elevated operating expenses, high interest costs, or other structural drags that warrant monitoring.

At a current price of $75.40, monday.com Ltd. is trading near fair value based on current fundamentals. Our value factor score of 44/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. Valuation metrics are mixed, with no strong signal of mispricing in either direction.

The stock currently trades at a P/E of 107.9x (a 354% premium to the sector median of 23.7x), P/B of 3.8x, P/S of 1.0x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis finds only partially justified by current fundamentals.

We assign a High uncertainty rating to monday.com Ltd.. Key risk factors include elevated market sensitivity (beta of 1.53), below-average price stability (28th percentile), elevated valuation multiple (P/E 107.9x) that leaves limited margin for error. The wide range of potential outcomes widens our fair value estimate and increases the possibility of permanent capital impairment. Investors considering this name should size positions accordingly and demand a meaningful margin of safety before initiating.

Specific risk factors that inform our assessment include: elevated market sensitivity (beta of 1.53); below-average price stability (28th percentile); elevated valuation multiple (P/E 107.9x) that leaves limited margin for error. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 28th percentile and quality factor at the 59th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: healthy gross margins of 89% provide a buffer against cost pressures; conservative leverage (0% D/E) limits balance sheet risk. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile warrants caution and disciplined position management.

We rate monday.com Ltd.'s capital allocation as Standard. Management has shown adequate — though not exceptional — stewardship of shareholder capital. Returns on equity stand at 12.6%, and the balance sheet is managed within acceptable parameters (D/E: 0%). Exemplary allocators typically sustain ROE above 20% and D/E below 50%; monday.com Ltd. falls short on at least one dimension.

There is room for improvement in optimizing the capital structure or enhancing shareholder returns. Absent a dividend, the overall capital allocation framework would benefit from either higher reinvestment returns, improved balance sheet efficiency, or increased shareholder distributions. We will monitor for signs of strategic improvement that could warrant an upgrade.

In summary, monday.com Ltd. receives a Avoid rating with a composite score of 38.4/100 (rank #3747 of 7,333). Our quantitative framework assigns a Narrow Moat (66/100, trend: stable), High uncertainty, and Standard capital allocation. The average factor score across quality, value, momentum, stability, and investment is 35/100.

Our analysis does not support a constructive view on monday.com Ltd. at this time. The combination of the current quantitative profile, high uncertainty, and standard capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.