WiseTech Global Ltd (ASX: WTC) shares are starting October around $32.46.
Is this a good price to pay for the logistics technology company's shares?
Here's what I think.
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Are WiseTech shares cheap?
At first glance, WiseTech shares do not look obviously cheap.
According to CommSec, consensus forecasts point to earnings per share (EPS) of $1.43 in FY27.
At $32.46, that puts the shares on a forward price-to-earnings ratio of roughly 23 times.
For a mature business, I would probably find that fairly unattractive. But WiseTech is not expected to stand still.
EPS is forecast to rise to $1.89 in FY28 and $2.29 in FY29. That would represent growth of around 32% in FY28, followed by another 21% increase the year after.
By FY29, earnings would be around 60% higher than the FY27 forecast.
That changes the valuation picture significantly. If the share price stayed where it is today, WiseTech would be trading on roughly 17 times FY28 earnings and just over 14 times FY29 earnings.
I think that starts to look quite attractive for a business expected to grow profits at that pace.
Why could earnings keep climbing?
The key for me is CargoWise.
WiseTech's software sits at the centre of complex logistics operations, helping freight forwarders and other supply chain businesses manage areas such as customs, warehousing, transport, and compliance.
Once that software is embedded across a customer's operations, there is scope for WiseTech to grow in more than one way.
It can win additional customers, expand the number of services existing customers use, and benefit as more logistics processes move onto digital platforms.
That is where I think the long-term opportunity becomes interesting.
Global supply chains are complicated, highly regulated, and increasingly dependent on software. As logistics businesses look to automate more tasks and manage operations more efficiently, I think CargoWise can keep becoming more important inside those organisations.
That gives WiseTech a credible path to growing revenue and earnings without relying on one short-term trend.
What am I paying for today?
This is the part I would focus on most in October.
At $32.46, investors are still paying for future growth. There is no getting around that.
But I think the better question is whether the current price looks demanding relative to the earnings WiseTech could generate in two or three years.
On that basis, I am much more comfortable.
If EPS reaches $2.29 in FY29, the current valuation would look far less expensive than it does today. And if the business is still growing strongly at that point, I think investors could be willing to pay more than 14 times earnings.
That gives me a reasonable margin for upside if execution remains strong.
Foolish takeaway
WiseTech still needs to deliver, but I think the current share price gives investors a much better setup than the headline valuation suggests.
The real appeal is how quickly earnings are expected to grow into today's share price.
If that trajectory holds, I think $32.46 could prove to be a very good entry point for long-term investors.
