If you have been following IREN, the past year has probably felt a bit like watching a rocket lift off. The stock has surged an incredible 234.8% over the last twelve months, with a striking 153.2% year-to-date gain. Even more recently, IREN jumped 23.6% in just the past week and saw a significant 64.1% increase in the last month. Such momentum naturally grabs investors’ attention and prompts the big question: with so much growth already factored in, is there still room for further gains or is peak optimism approaching? Much of the recent excitement seems to reflect broader market shifts, as sentiment around technology-driven companies has improved considerably and investors are focusing on firms with perceived future-proof business models. As a result, the risk-reward profile for IREN appears quite different from a year or even a month ago. Every new high brings out a variety of opinions on whether the rally is just beginning or due for a pause. Ultimately, it comes back to valuation. By the numbers, IREN currently scores a 3 out of 6 on our valuation checks. This suggests it appears undervalued using half of the key methods we track. But what do these scores really mean, and how does IREN compare across the valuation spectrum? Let’s break down the traditional approaches, and then explore an even more insightful way to assess what the stock may truly be worth. IREN delivered 234.8% returns over the last year. See how this stacks up to the rest of the Software industry.

A Discounted Cash Flow (DCF) model estimates a company’s intrinsic value by projecting its expected future cash flows and discounting those values back to the present. This method is designed to reflect what an investor might rationally pay today for all the company’s anticipated future cash generation.

For IREN, the most recent Free Cash Flow (FCF) is -$1.26 billion, reflecting the company’s significant upfront investments. Analysts expect this figure to improve dramatically, with FCF in 2027 estimated at $212.4 million. Although only five years of analyst projections are available, Simply Wall St extends these out to a full ten-year horizon to account for future performance, suggesting steady FCF growth in the years ahead.

Using the 2 Stage Free Cash Flow to Equity model and factoring in all projections, the DCF model arrives at an estimated intrinsic value of $35.62 per share. With IREN currently trading at a 25.7% discount to this value, the model suggests the stock is notably undervalued at current levels.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for IREN.

IREN Discounted Cash Flow as at Aug 2025 IREN Discounted Cash Flow as at Aug 2025

Our Discounted Cash Flow (DCF) analysis suggests IREN is undervalued by 25.7%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

For tech and software companies like IREN, especially those still working towards consistent profitability, the Price-to-Sales (P/S) multiple is often the preferred valuation benchmark. Unlike earnings-based ratios, P/S focuses on revenue, making it more reliable during periods of scale-up or volatile margins. However, what counts as a fair P/S multiple is not universal. It depends on factors such as the sector’s growth potential, the company’s business model, and how much risk investors see in future revenues.

IREN currently trades at a P/S multiple of 19.1x, which is nearly four times the software industry average of 5.1x and just shy of the peer group average at 19.4x. While a higher P/S can indicate strong growth optimism or unique advantages, it may also reflect greater perceived risk or market exuberance.

Simply Wall St’s “Fair Ratio” methodology helps cut through the noise. Instead of only comparing across peers or broad industry averages, the Fair Ratio considers IREN’s specific profile, including its growth trajectory, profit margins, risk factors, and even market cap, to determine what an appropriate multiple should be under current conditions. With a Fair Ratio not materially different from IREN’s present P/S, the analysis suggests the market is valuing IREN about right given its prospects and risks.

Result: ABOUT RIGHT

NasdaqGS:IREN PS Ratio as at Aug 2025 NasdaqGS:IREN PS Ratio as at Aug 2025

PS ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Earlier we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is more than just a set of numbers; it is your story or perspective about why a company is valuable. Narratives tie together your assumptions about factors such as future revenue, earnings, margins, and risk to estimate a fair value for the stock. By linking IREN’s company story to a concrete financial forecast and then to a calculated fair value, Narratives help you see not only what the market thinks but also what you think, based on your own logic and research.

Best of all, Narratives are easy to use and available to everyone on Simply Wall St’s Community page, where millions of investors share and refine their views. When you build or follow a Narrative, it visually compares your fair value to the current price, making it clearer to interpret the gap between valuation and market price. Thanks to dynamic updates, your assumptions and the Narrative itself automatically adjust with every new earnings result or major company announcement.

For example, some investors currently forecast IREN’s fair value as high as $27 per share, while others see a much more cautious scenario at $11, reflecting different expectations on growth, risk, and how the story may play out.

For IREN, we’ll make it really easy for you with previews of two leading IREN Narratives:

🐂 IREN Bull Case

Fair value: $26.54

Current price is about 0.2% over this fair value

Forecast revenue growth: 30%

  • IREN operates four Bitcoin mining sites powered by 100% renewable energy, with recent expansions and a strong push toward greater mining efficiency.

  • The company maintains financial strength, zero debt, solid cash reserves, and is diversifying into AI and high-performance computing services. It also sells 100% of its mined Bitcoin daily for consistent cash flow.

  • Growth prospects are supported by ambitious expansion plans, a focus on efficient energy use, and exposure to rising Bitcoin prices. However, investors should consider risks such as potential future share dilution and Bitcoin price volatility.

🐻 IREN Bear Case

Fair value: $26.07

Current price is about 1.6% over this fair value

Forecast revenue growth: 60%

  • Record financial results and rapid growth in mining capacity are being achieved. However, the company is pausing mining expansion after reaching 50 EH/s to focus on AI data center ambitions.

  • IREN is investing heavily in AI infrastructure and data centers, with plans for large-scale liquid-cooled facilities and strategic, capital-intensive sites like Sweetwater in Texas, aiming to become a leader in scalable AI infrastructure.

  • Significant new funding, debt issuance, and share sales are required to support these ambitious goals. This indicates ongoing financial risk and the potential for future dilution as IREN shifts from a pure mining company to an AI and compute infrastructure business.

Do you think there’s more to the story for IREN? Create your own Narrative to let the Community know!

NasdaqGS:IREN Community Fair Values as at Aug 2025 NasdaqGS:IREN Community Fair Values as at Aug 2025

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include IREN.

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