Over the past six months, Commerce’s shares (currently trading at $4.64) have posted a disappointing 14.3% loss, well below the S&P 500’s 13.4% gain. This may have investors wondering how to approach the situation.
Is now the time to buy Commerce, or should you be careful about including it in your portfolio? Check out our in-depth research report to see what our analysts have to say, it’s free for active Edge members.
Why Do We Think Commerce Will Underperform?
Despite the more favorable entry price, we're swiping left on Commerce for now. Here are three reasons we avoid CMRC and a stock we'd rather own.
1. Weak Billings Point to Soft Demand
Billings is a non-GAAP metric that is often called “cash revenue” because it shows how much money the company has collected from customers in a certain period. This is different from revenue, which must be recognized in pieces over the length of a contract.
Commerce’s billings came in at $89.47 million in Q3, and over the last four quarters, its year-on-year growth averaged 2.4%. This performance was underwhelming and suggests that increasing competition is causing challenges in acquiring/retaining customers. 
2. Projected Revenue Growth Is Slim
Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.
Over the next 12 months, sell-side analysts expect Commerce’s revenue to rise by 4.1%, a slight deceleration versus its 19.4% annualized growth for the past five years. This projection is underwhelming and implies its products and services will see some demand headwinds.
3. Mediocre Free Cash Flow Margin Limits Reinvestment Potential
Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.
Commerce has shown weak cash profitability over the last year, giving the company limited opportunities to return capital to shareholders. Its free cash flow margin averaged 8.3%, subpar for a software business.
Final Judgment
Commerce falls short of our quality standards. After the recent drawdown, the stock trades at 1.1× forward price-to-sales (or $4.64 per share). This valuation is reasonable, but the company’s shaky fundamentals present too much downside risk. There are better investments elsewhere. We’d suggest looking at the Amazon and PayPal of Latin America.
Stocks We Would Buy Instead of Commerce
The market’s up big this year - but there’s a catch. Just 4 stocks account for half the S&P 500’s entire gain. That kind of concentration makes investors nervous, and for good reason. While everyone piles into the same crowded names, smart investors are hunting quality where no one’s looking - and paying a fraction of the price. Check out the high-quality names we’ve flagged in our Top 6 Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
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