The Raspberry Pi (LSE:RPI) share price is up 9.2% over the previous 12 months. That will disappoint some traders. It signifies that £10,000 invested simply after the IPO (preliminary public providing) would now be value £10,900.

The place might it go from right here? Properly, sadly I feel it could be buying and selling at truthful worth. Right here’s why.

The valuation is somewhat problematic

The corporate is forecast to ship sturdy earnings development, with web earnings anticipated to rise from $20.02m in 2025 to $26.09m in 2026 and $33.15m in 2027. This interprets to annual earnings development charges of roughly 30.3% for 2025–2026 and 27.1% for 2026–2027, with a mean annual development price of about 28.7% over the interval.

The price-to-earnings (P/E) ratio, whereas falling quickly as earnings catch up to the corporate’s valuation, stays elevated. The P/E sits at 57.4 occasions in 2025, 43.7 occasions in 2026, and 34.6 occasions in 2027. Regardless of the excessive multiples, the corporate’s development profile is notably above the sector common, justifying some premium but in addition highlighting the chance if development expectations falter.

Money-adjusted metrics

On to the steadiness sheet. Raspberry Pi’s has a big web money place. It sits at $43.19m in 2025, $58.66m in 2026, and $88.3m in 2027. This sturdy money place supplies monetary flexibility and reduces danger, supporting continued funding in innovation and growth.

Wanting on the enterprise-value-to-EBITDA (earnings earlier than curiosity, tax, depreciation, and amortisation) ratio, one other key valuation metric, the corporate is anticipated to commerce at 26.4 occasions in 2025, 20.9 occasions in 2026, and 16.5 occasions in 2027. These figures, whereas nonetheless excessive, are according to fast-growing know-how companies and may pattern downward as earnings broaden.

To evaluate whether or not the price of Raspberry Pi’s shares is justified by their development, we will use a ahead P/E-to-growth (PEG) ratio (P/E divided by common annual EPS development price). Utilizing the typical P/E for 2025–2027 (45.2x) and the typical annual EPS development price (about 28.7%), the ahead PEG ratio is roughly 1.58.

That is above the basic truthful worth benchmark of 1, indicating the shares are costly relative to their development, however not excessively so for a tech inventory. If we had been to think about web money, that determine would develop into barely extra interesting.

The underside line

Personally, I consider Raspberry Pi is sort of richly valued. And that’s due to the quantitive information above, but in addition the truth that it operates in a sector with comparatively low obstacles to entry. The only-board laptop market is accessible to start-ups, with minimal capital necessities and open-source designs broadly obtainable. Whereas regulatory compliance and model loyalty provide some safety, rivals can shortly replicate core merchandise, intensifying market rivalry.

It’s this lack of a moat that considerations me. Nonetheless, analysts are nonetheless attending to know Raspberry Pi, and if it begins outperforming the consensus, it might actually push increased. It’s value contemplating, however in all probability not well worth the danger for me.