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Category: Stock Market and Endava
Date: 26 September 2019 Stock Price: $38.60 We take a look at the 4th quarter earnings release of their 2019 fiscal year of Endava a next-generation technology services provider to various markets and industries.
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About Endava
Endava is a leading next-generation technology services provider and helps accelerate disruption by delivering rapid evolution to enterprises. Using distributed enterprise agile at scale, Endava collaborates with its clients, seamlessly integrating with their teams, catalysing ideation and delivering robust solutions. Endava helps its clients become digital, experience-driven businesses by assisting them in their journey from idea generation to development and deployment of products, platforms and solutions. It services clients in the following industries: Payments and Financial Services, TMT, Consumer Products, Retail, Logistics and Healthcare. Endava had 5,754 employees as of June 30, 2019 located in offices in North America and Western Europe and delivery centres in Romania, Moldova, Bulgaria, Serbia, North Macedonia, Argentina, Uruguay, Venezuela, and Colombia.
Overview of Endava's latest earnings report
The numbers we are interested in (for the quarter):
- Revenue: £76.681 million (up from £61.473 million from the same quarter of the previous year)
- Revenue increased by 124.7% over the last 12 months
- Cost of sales: £50.697 million (up from £ 40.058 million for the same quarter of the previous year)
- Cost of sales increased by 26.5% over the last 12 months
- Net income: £8.228 million (up from £4.8986 million for the same quarter of the previous year)
- Diluted income per share: £0.15 (up from £0.10 for the same quarter of the previous year)
- Diluted weighted-average shares outstanding: 55.195 million (down from 55.266 million for the same quarter of the previous year)
- Cash and cash equivalents: £70.172 million
- Cash and cash equivalents per share: £1.27
- Cash and cash equivalents makes up 4.07% of Endava's market capital
- Cash and cash equivalents makes up 31.5% of Endava's total assets
- Accounts receivable: £65.917 million
- Accounts receivable makes up 27.8% of Endava's total assets
- Stockholders equity of Endava: £166.329 million
- Stockholders equity per share: £3.01
- Endava is trading at 12.8 times its stockholders equity which is well outside the expected range of between 2 and 4 which most companies tend to trade at.
- Cash generated from operations: £11.059million
- Cash generated from operations per share: £0.20
Endava's management commentary on the results and earnings guidance
LONDON--(BUSINESS WIRE)-- Endava plc(NYSE: DAVA) ("Endava" or the "Company") a global provider of digital transformation, agile development and intelligent automation services, today announced results for the three months ended June 30, 2019, the fourth quarter of its 2019 fiscal year ("Q4 FY2019") and for the Fiscal Year ended June 30, 2019 ("FY2019").
"We just completed our first year as a public company and I could not be more pleased with our performance as we continue to grow in all of our verticals and all of our geographies. Our revenue for Q4 FY2019 was £76.6 million, an impressive increase of 24.6% Year on Year on a reported basis from £61.5 million in the same quarter in the prior year. For FY2019, our revenue totalled £287.9 million a 32.3% Year on Year growth." said John Cotterell, Endava’s CEO.
Outlook
First Quarter Fiscal Year 2020:
We expect revenues will be in the range £81.0m to £ 81.8m, representing constant currency growth of between 20.0% and 21.0%. We expect adjusted diluted EPS to be in the range of £0.21 to £0.22 per share.
Full Fiscal Year 2020:
We expect revenues will be in the range £346.0m to £348.0m, representing constant currency growth of between 20.0% and 21.0%. We expect adjusted diluted EPS to be in the range of £0.85 to £0.88 per share. Our guidance regarding constant currency growth is pro-forma for the sale of the Captive which closed on August 31, 2019. Endava is not able, at this time, to provide an outlook for IFRS diluted EPS for Q1 FY2020 or FY2020 because of the unreasonable effort of estimating certain items that are excluded from adjusted diluted EPS, including, for example, share-based compensation expense, amortisation of acquired intangible assets and foreign currency exchange (gains) losses, the effect of which may be significant.
"We just completed our first year as a public company and I could not be more pleased with our performance as we continue to grow in all of our verticals and all of our geographies. Our revenue for Q4 FY2019 was £76.6 million, an impressive increase of 24.6% Year on Year on a reported basis from £61.5 million in the same quarter in the prior year. For FY2019, our revenue totalled £287.9 million a 32.3% Year on Year growth." said John Cotterell, Endava’s CEO.
Outlook
First Quarter Fiscal Year 2020:
We expect revenues will be in the range £81.0m to £ 81.8m, representing constant currency growth of between 20.0% and 21.0%. We expect adjusted diluted EPS to be in the range of £0.21 to £0.22 per share.
Full Fiscal Year 2020:
We expect revenues will be in the range £346.0m to £348.0m, representing constant currency growth of between 20.0% and 21.0%. We expect adjusted diluted EPS to be in the range of £0.85 to £0.88 per share. Our guidance regarding constant currency growth is pro-forma for the sale of the Captive which closed on August 31, 2019. Endava is not able, at this time, to provide an outlook for IFRS diluted EPS for Q1 FY2020 or FY2020 because of the unreasonable effort of estimating certain items that are excluded from adjusted diluted EPS, including, for example, share-based compensation expense, amortisation of acquired intangible assets and foreign currency exchange (gains) losses, the effect of which may be significant.
Endava (NYSE: DAVA) stock price history
The image below, obtained from Google, shows the stock price history of Endava (NYSE: DAVA) since its listing in July 2018. And it's been a good time for Endava stockholders. At listing it was trading around $25 a stock, and its currently it's trading at $38.60 Thats a decent return of 54.4% provided over the last 5 years. The stock is also trading at a lot closer to its 52 week high of $43.93 than it is to its 52 week low of $21.13 which to us is a clear indication that the short term sentiment and momentum of Endava stock is very positive.
Endava's (NYSE: DAVA) latest stock valuation
So based on the earnings report of Endava (NYSE: DAVA) and the latest earnings guidance provided what do we value Endava (DAVA) stock at? Based on their latest earnings report our target (full value) price for Endava at $28.30 a stock. We therefore believe the stock of KB Home is overvalued
We usually suggest long term fundamental and value investors look to enter the stock at least 10% below our target price, which in this case is $28.30 Therefore we believe the a good entry point into the stock is below $25.50. We believe the stock of Endava will pull back from current levels to levels closer to our valuation levels in coming weeks and months.
We usually suggest long term fundamental and value investors look to enter the stock at least 10% below our target price, which in this case is $28.30 Therefore we believe the a good entry point into the stock is below $25.50. We believe the stock of Endava will pull back from current levels to levels closer to our valuation levels in coming weeks and months.