Siriusware Integration Will Expand Market Presence In Canada

Key Takeaways

• Strategic repositioning and expansion efforts across multiple segments are expected to enhance profitability and drive significant revenue growth.
  
• Innovations in e-commerce and platform integrations suggest improved efficiency, higher client satisfaction, and potential market expansion in North America.
  
• Delays, demand moderation, weather variability, and low-margin contracts challenge accesso's profitability and revenue growth across key segments and projects.

Catalysts

Develops technology solutions for the attractions and leisure industry in the United Kingdom, other European countries, Australia, the South Pacific, Asia, Africa, the United States, Canada, Mexico, and Central and South America.

• Accesso's strategic repositioning of the Ingresso business is yielding results, with expectations for improved profitability from fine-tuning pricing and commercial arrangements, which should positively impact revenue and net margins.
  
• Expansion in the ticketing and distribution segment, evidenced by a significant increase in ticket volume and the signing of a new high-volume distributor, suggests potential for revenue growth as these partnerships mature.
  
• The rollout of accesso's Passport e-commerce platform updates, which have shown to improve client revenues by around 4%, indicates further potential for increased transactional revenue and improved net margins.
  
• Accesso Freedom and integration with accesso Siriusware are gaining traction, with positive feedback from new clients and expansion prospects in Canada, indicating possible revenue growth and market expansion.
  
• The operational adjustments and strategic enhancements in Accesso Paradox are expected to boost e-commerce volumes, implying improved operational efficiency that could enhance gross margins and overall earnings.

accesso Technology Group Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming accesso Technology Group's revenue will grow by 4.1% annually over the next 3 years.
• Analysts assume that profit margins will shrink from 5.6% today to 5.4% in 3 years time.
• Analysts expect earnings to reach $9.2 million (and earnings per share of $0.24) by about February 2028, up from $8.5 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting $13.0 million in earnings, and the most bearish expecting $7.2 million.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 45.8x on those 2028 earnings, up from 29.0x today. This future PE is greater than the current PE for the GB Software industry at 32.9x.
• Analysts expect the number of shares outstanding to decline by 0.19% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.54%, as per the Simply Wall St company report.

accesso Technology Group Future Earnings Per Share Growth

Risks

• The timeline shift for a key installation project in the Middle East has led to lower-than-expected EBITDA, impacting earnings due to delays in high-margin revenue.
  
• Moderation of demand in the destination leisure sector, particularly in major theme parks, might lead to challenges in maintaining expected revenue and profitability growth.
  
• Weakness in live entertainment ticket sales due to softer demand at tourist venues may lead to reduced revenue from the ShoWare segment.
  
• The financial results are negatively affected by variations in weather conditions impacting revenue in key sectors such as ski resorts, impacting revenue predictability and stability.
  
• The profitability of the Ingresso platform is challenged by low-margin contracts, which, unless renegotiated or exited, could continue to dilute overall profit margins.

Valuation

• The analysts have a consensus price target of £7.033 for accesso Technology Group based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of £8.0, and the most bearish reporting a price target of just £6.0.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $172.6 million, earnings will come to $9.2 million, and it would be trading on a PE ratio of 45.8x, assuming you use a discount rate of 7.5%.
  
• Given the current share price of £4.99, the analyst price target of £7.03 is 29.1% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.