1 Growth Stock Down 85% to Buy Hand Over Fist, According to Wall Street | The Motley Fool

What if I told you there was an excellent growth stock trading at a bargain price and hiding in plain sight? Wall Street sees great things, but the market has yet to catch on. Consider Bill Holdings (BILL 1.94%) stock. The company is growing fast and recently swung to a profit, but of course, there’s more to the story.

Handling the bills

Gone are the days when a large staff would manually enter data to handle payables, receivables, and the like. More and more companies are getting onto the cloud, and Bill provides a seamless, cloud-based platform that connects all of a company’s back-office financial management to a list of more than 8 million financial institutions for instant transactions and interconnected payments. This network includes banks like JPMorgan Chase and Bank of America, and it’s also connected to more than 9,000 accounting firms that service small businesses.

Bill works with micro-sized through mid-market businesses, and it had 493,000 users as of the end of its 2025 fiscal fourth quarter (ended June 30). It makes money from subscription plans, which creates a sticky business with recurring revenue, but most of its money, or 72% in the fourth quarter, comes from the transaction fees that it takes when customers use its network.

Although big businesses today have predominantly moved over to cloud-based solutions like Bill, these are custom-built and expensive models that leave out small businesses. Bill fills that niche, offering an off-the-shelf systems that still fits each business’s unique needs.

Management sees plenty of ways to expand the business, from attracting new clients and adding new features to increasing engagement with existing members and expanding internationally. It also sees a strong network effect: as it increases membership, more institutions want to be on its network, and as it expands, it’s able to invest in more features that attract new clients.

Growth vs. profits

Bill went public in 2019, and it was growing rapidly at that time, generating high investor enthusiasm and a booming stock. However, with COVID-19 hurting small business spending, management took a different tack and started to focus on boosting the bottom line.

That cascaded into negative investor sentiment, which never recovered. Bill is now growing at a slower, but still double-digit percentage pace, and it reported its first full year of positive net income in fiscal 2025. For the full year, revenue increased 13%, while core revenue, which doesn’t include float revenue (earnings on invested client funds), was up 16%. Net income was $23.8 million compared with a $28.9 million net loss the year before.

The market greeted the news positively, but the stock remains about 85% off its all-time high.

Is this a bargain or a value trap?

Bill stock trades at a reasonable valuation of 21 times next year’s earnings and less than four times last year’s sales. The market is still pessimistic about its slowing sales, even though the flip side is that it’s become cost-efficient and it still has a huge long-term opportunity.

BILL PS Ratio data by YCharts

Wall Street is giving it a thumbs up, mostly. Out of 45 analysts covering the company, 35 give it an outperform (strong buy) or buy recommendation, while 10 say hold, and none say sell. The average target stock price during the next 12 to 18 months is about 5% higher than today’s price of about $54, while the high estimate is a 70% gain.

Management also gave shareholders a boost of confidence when it announced a $300 million share repurchase program. That implies it sees the current price as a bargain and expects it to go up.

Bill stock got another boost in early September when activist hedge fund Starboard Value took a 8.5% stake. It’s trying to get new board members in that will lead it in a different direction and create shareholder value.

Both Wall Street and Starboard see a strong future for Bill, and if you’re a long-term investor, you might want to take a position in the stock at these prices.