3 Reasons MANH is Risky and 1 Stock to Buy Instead

Over the last six months, Manhattan Associates’s shares have sunk to $176.13, producing a disappointing 8.6% loss - a stark contrast to the S&P 500’s 13.4% gain. This may have investors wondering how to approach the situation.

Is there a buying opportunity in Manhattan Associates, or does it present a risk to your portfolio? Dive into our full research report to see our analyst team’s opinion, it’s free for active Edge members.

Why Is Manhattan Associates Not Exciting?

Even though the stock has become cheaper, we're swiping left on Manhattan Associates for now. Here are three reasons we avoid MANH 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.

Manhattan Associates’s billings came in at $273.2 million in Q3, and over the last four quarters, its year-on-year growth averaged 5%. 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 Manhattan Associates’s revenue to rise by 5%, a deceleration versus its 12.5% annualized growth for the past five years. This projection doesn't excite us and suggests its products and services will see some demand headwinds.

3. Low Gross Margin Reveals Weak Structural Profitability

For software companies like Manhattan Associates, gross profit tells us how much money remains after paying for the base cost of products and services (typically servers, licenses, and certain personnel). These costs are usually low as a percentage of revenue, explaining why software is more lucrative than other sectors.

Manhattan Associates’s gross margin is substantially worse than most software businesses, signaling it has relatively high infrastructure costs compared to asset-lite businesses like ServiceNow. As you can see below, it averaged a 56.5% gross margin over the last year. Said differently, Manhattan Associates had to pay a chunky $43.46 to its service providers for every $100 in revenue.

The market not only cares about gross margin levels but also how they change over time because expansion creates firepower for profitability and free cash generation. Manhattan Associates has seen gross margins improve by 3.1 percentage points over the last 2 year, which is very good in the software space.

Final Judgment

Manhattan Associates’s business quality ultimately falls short of our standards. After the recent drawdown, the stock trades at 9.6× forward price-to-sales (or $176.13 per share). This valuation tells us a lot of optimism is priced in - we think there are better opportunities elsewhere. We’d recommend looking at one of our all-time favorite software stocks.

Stocks We Like More Than Manhattan Associates

If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.

Don’t wait for the next volatility shock. Check out 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).

Stocks that have made our list include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Comfort Systems (+782% five-year return). Find your next big winner with StockStory today.