Globant S.A. (GLOB)
Tecnología / Servicios de TI
A global digital transformation services provider with client relationships spanning more than a decade (96% of revenue from recurring clients) that guided its first year-over-year revenue contraction, with the stock 45% below its 52-week high; at $40 the market is paying for a slowdown the company itself doesn't yet know is cyclical or structural.
- Price
- $39.75
- Intrinsic value (5y, base)
- $64
- Total annual return (5y)
- 9.9%
- Status (nominal)
- Fairly valued
- Margin of safety
- +22%
The essentials
- Revenue of US$2,454.9 million in 2025 (+1.6%), but the company's own guidance for 2026 is −1.1% to +0.3% — the first year-over-year decline since the 2014 IPO.
- 96.0% of 2025 revenue came from clients that already had services under contract the prior year, and the largest client (The Walt Disney Company) has weighed 8.7% for three years running — evidence of real switching costs, not just scale.
- The Business Optimization Plan (headcount reduction from 29,198 to 26,906 professionals, −7.8%) loaded US$52.0 million of costs in 2025 and another US$32.3 million in the first half of 2026 — reported earnings are depressed by restructuring, not just weaker demand.
- Return on invested capital of 7.27%, below the 10% bar — the typical pattern of a serial acquirer (goodwill and intangibles from past acquisitions loading invested capital).
Intrinsic value — two valuation methods
By both methods, the value today (DCF $108 · Multiples $51) exceeds the market price ($40).
Pillars of the analysis
The verdict — today vs 5 years
Today — fairly valued: at $40 trades ~22.2% below its value discounted to today (~$51); the discount is positive but does not reach the margin of safety we require (≥38%).
At 5 years — En valor: the target price ($64) plus dividends yield between the 4% floor and the 10% average return — a reasonable return, though without the margin of a great investment.
The bridge: the return at 5 years exceeds the risk-free rate (4.5%) — but the discount does not reach the required margin of safety (≥38%). To require a 15% annual return, it would need to be bought at ~$32.
Thesis
The business
Digital transformation services provider with high client retention (96% of revenue recurring) but growth that stopped abruptly: from +17.7% (2023) and +15.3% (2024) to +1.6% (2025) and guidance of −1.1% to +0.3% for 2026. Return on invested capital of 7.27% sits below the 10% bar, partly due to goodwill accumulated from a serial acquisition strategy.
The valuation
Valued on P/E over normalized net income (ex restructuring costs), with an exit multiple derived from the IT services archetype band (14x-19x), at the low end of the range given moderate quality and terminal growth. The base case yields a 5-year value of $64, against a price of $40 — a +10% annual return.
The margin of safety
It trades close to intrinsic value, far from the required margin of safety. The verdict is Fairly valued: the stock trades 45% below its 52-week high, and much of that punishment is already justified by the company's own guidance, but not all of it — the base case still implies room for recovery from the current price.
What to watch
The central disconfirmer: if the 2026 revenue contraction turns out to be the first year of a structural decline driven by generative AI disrupting IT services demand (clients internalizing development instead of outsourcing it), rather than a one- or two-year cyclical trough, the adverse scenario — not the base case — is the one that describes the business.
Educational / informational. Does not constitute investment advice.