NICE

We rate NICE Ltd. (NICE) as a Hold with a composite score of 62.6/100 at a current price of $114.30. The stock presents a mixed quantitative picture — neither compelling enough to warrant new accumulation nor weak enough to justify selling for existing holders. Our factors are split, and the overall profile suggests patience is warranted.

The rating is primarily driven by strength in value (88th percentile) and quality (84th percentile), which together account for the majority of the composite score. All factors score above the 40th percentile, indicating no material weakness in the quantitative profile. We assign a Wide Moat rating (72/100), Low uncertainty, and Exemplary capital allocation.

Key items to watch: quarterly earnings execution and sector-level competitive dynamics. 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.

NICE 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 62.6/100 places it at rank #457 in our full 7,333-stock universe. With a $10.7B market capitalization, NICE Ltd. operates at meaningful scale within the Services sector, providing competitive advantages in distribution, procurement, and customer reach.

Revenue is growing at 15%, though momentum at the 42th 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 67% (+7.2pp vs sector) narrow to operating margins of 20% (+16.5pp vs sector) and net margins of 16.2%, yielding a gross-to-net conversion rate of 24%. This conversion rate is typical for the sector, suggesting a standard cost structure without notable efficiency advantages or disadvantages.

At a current price of $114.30, NICE Ltd. appears undervalued relative to its fundamentals. Our value factor score of 88/100 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. The stock screens as attractively priced on a majority of these measures, suggesting the market may be underappreciating the underlying fundamentals.

The stock currently trades at a P/E of 16.4x (a 31% discount to the sector median of 23.7x), EV/EBITDA of 2.3x (discounted to peers), P/B of 2.0x, P/S of 0.7x. The below-sector P/E suggests possible undervaluation or the market pricing in near-term headwinds.

We assign a Low uncertainty rating to NICE Ltd.. The company exhibits strong financial stability with a beta of 0.86, conservative leverage (13% D/E), and a stability factor in the 61th percentile. The predictable nature of the business model and solid financial position reduce the range of potential outcomes, giving us confidence in our fair value estimate.

We identify no major risk factors at this time. The company's stability factor sits at the 61th percentile with quality at the 84th percentile, both of which support our low-risk assessment. The absence of material leverage, profitability, or volatility concerns reduces the likelihood of a permanent capital loss scenario.

Key risk mitigants include: healthy gross margins of 67% provide a buffer against cost pressures; conservative leverage (13% D/E) limits balance sheet risk; above-average stability (61th percentile) suggests predictable business dynamics. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate NICE Ltd.'s capital allocation as Exemplary. Management demonstrates a strong track record of balancing reinvestment with shareholder returns, evidenced by returns on equity of 49.3%, disciplined leverage (13% D/E), best-in-class net margins of 16.2%. Exemplary allocators typically generate returns on equity above 20% while maintaining debt-to-equity below 50% — NICE Ltd. meets this high bar.

The balance sheet remains conservatively managed, providing financial flexibility for opportunistic investments while maintaining a margin of safety for shareholders. We note that the combination of 33.4% return on assets and controlled leverage suggests management is deploying capital at rates well above the cost of capital — the hallmark of exemplary stewardship.

In summary, NICE Ltd. receives a Hold rating with a composite score of 62.6/100 (rank #457 of 7,333). Our quantitative framework assigns a Wide Moat (72/100, trend: stable), Low uncertainty, and Exemplary capital allocation. The average factor score across quality, value, momentum, stability, and investment is 66/100.

Our analysis supports a neutral stance on NICE Ltd.. While the quantitative profile is not weak enough to warrant selling, it lacks the multi-factor strength required for a buy recommendation. Existing holders should maintain positions and monitor for catalysts — either fundamental improvement or valuation compression — that would shift the risk-reward balance.