TTAN

We rate ServiceTitan, Inc. (TTAN) as a Reduce with a composite score of 41.4/100 at a current price of $64.00. The quantitative profile shows weakness across multiple dimensions, suggesting limited upside potential and elevated risk of underperformance relative to peers over the next 12 months.

The rating is primarily driven by strength in stability (56th percentile) and momentum (43th percentile), which together account for the majority of the composite score. Offsetting weakness in investment (24th percentile) and value (37th percentile) tempers our overall conviction. We assign a Narrow Moat rating (45/100), Medium uncertainty, and Poor capital allocation.

Key items to watch: the path to profitability. 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.

ServiceTitan, Inc. 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 41.4/100 places it at rank #3367 in our full 7,333-stock universe. At $8.8B in market capitalization, ServiceTitan, Inc. is a mid-cap player in the Services space, which limits certain scale advantages but may allow for more agile strategic execution.

Revenue is growing at 16%, though momentum at the 43th 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 70% (+10.7pp vs sector) narrow to operating margins of -17% (-20.7pp vs sector) and net margins of -16.0%, yielding a gross-to-net conversion rate of -23%. 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 $64.00, ServiceTitan, Inc. is trading at a premium to fundamental value. Our value factor score of 37/100 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 premium valuation implies the market is pricing in significant future growth or quality improvements that are not yet fully reflected in current fundamentals.

The stock currently trades at P/B of 4.1x, P/S of 6.6x. We evaluate these multiples in the context of both absolute levels and sector-relative positioning to form our valuation view.

We assign a Medium uncertainty rating to ServiceTitan, Inc.. The stock presents a balanced risk profile: current negative profitability (net margin -16.0%). While not risk-free, the core business fundamentals are adequate to withstand moderate economic stress, and the range of potential outcomes around our fair value estimate is manageable.

Specific risk factors that inform our assessment include: current negative profitability (net margin -16.0%). 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 56th percentile and quality factor at the 42th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: healthy gross margins of 70% provide a buffer against cost pressures; conservative leverage (7% 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 is favorable for long-term investors.

We rate ServiceTitan, Inc.'s capital allocation as Poor. Key concerns include low returns on equity (-10.0%), negative profitability, weak asset returns (ROA -8.3%). Exemplary capital allocators generate ROE above 20% and maintain conservative leverage — ServiceTitan, Inc. significantly underperforms these benchmarks, raising questions about management's ability to create shareholder value.

Investors should scrutinize management's reinvestment decisions and balance sheet trajectory before committing capital. Poor capital allocation often compounds over time: overlevered balance sheets limit strategic flexibility, while low returns on capital destroy shareholder value. We would need to see sustained improvement in profitability metrics and balance sheet discipline before considering an upgrade.

In summary, ServiceTitan, Inc. receives a Reduce rating with a composite score of 41.4/100 (rank #3367 of 7,333). Our quantitative framework assigns a Narrow Moat (45/100, trend: stable), Medium uncertainty, and Poor capital allocation. The average factor score across quality, value, momentum, stability, and investment is 40/100.

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