In-housing Source Code Will Expand Global Market Reach

Published
10 Aug 25
Updated
15 Aug 25
AnalystConsensusTarget's Fair Value
US$5.00
18.8% undervalued intrinsic discount
15 Aug
US$4.06
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1Y
-7.7%
7D
2.5%

Author's Valuation

US$5.0

18.8% undervalued intrinsic discount

AnalystConsensusTarget Fair Value

Key Takeaways

  • Greater control of BOHA! software and expanding recurring SaaS revenue position the company for increased margins and accelerated product innovation.
  • Expansion into gaming, enhanced sales strategies, and a shift to software-enabled offerings are driving sustainable growth and reduced reliance on legacy hardware.
  • Structural decline in traditional printing markets, competitive and customer risks, slow innovation transition, and upfront investment in new technology threaten earnings stability and future growth.

Catalysts

About TransAct Technologies
    Designs, develops, and markets transaction-based and specialty printers and terminals in the United States and internationally.
What are the underlying business or industry changes driving this perspective?
  • The acquisition and in-housing of the BOHA! source code is expected to give TransAct long-term control over its software ecosystem, allowing for faster product innovation, more tailored feature enhancements, and the ability to sublicense-directly supporting revenue growth from expanded offerings and potentially increasing future recurring SaaS revenue and margins as royalty payments fall away.
  • Robust demand for BOHA! terminals and accelerating adoption of the food safety ecosystem reflects growing regulatory focus on traceability and compliance, especially in quick service restaurants and convenience stores. This inflection is likely to expand TransAct's addressable market and drive higher top-line growth with a larger recurring revenue base.
  • The ongoing expansion into regulated charitable gaming and new use cases (such as sports betting kiosks and video lottery terminals), as well as successful partnerships like CasinoTrac, position TransAct to benefit from increased IoT integration and the global growth in gaming markets, fueling incremental revenue streams and higher-margin software/service attachment rates.
  • Enhanced go-to-market strategies-including targeted sales, customer engagement improvements, and a successful "land and expand" approach-are expected to capture greater share in both existing and adjacent markets, supporting sustainable revenue momentum and improved revenue visibility over time.
  • Operational streamlining, consistent product and manufacturing improvements, and a growing mix of software-enabled and subscription-based products are designed to elevate operating margins, reduce cost volatility, and ultimately drive long-term earnings growth as the company transitions away from legacy hardware dependence.

TransAct Technologies Earnings and Revenue Growth

TransAct Technologies Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?
  • Analysts are assuming TransAct Technologies's revenue will grow by 10.4% annually over the next 3 years.
  • Analysts are not forecasting that TransAct Technologies will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate TransAct Technologies's profit margin will increase from -18.0% to the average US Tech industry of 6.2% in 3 years.
  • If TransAct Technologies's profit margin were to converge on the industry average, you could expect earnings to reach $4.0 million (and earnings per share of $0.4) by about August 2028, up from $-8.6 million today. The analysts are largely in agreement about this estimate.
  • In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 16.0x on those 2028 earnings, up from -4.9x today. This future PE is lower than the current PE for the US Tech industry at 20.6x.
  • Analysts expect the number of shares outstanding to grow by 0.94% per year for the next 3 years.
  • To value all of this in today's terms, we will use a discount rate of 8.4%, as per the Simply Wall St company report.

TransAct Technologies Future Earnings Per Share Growth

TransAct Technologies Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?
  • Ongoing digitization and the proliferation of mobile and contactless payment technologies continue to erode the demand for printed receipts and transactional printers, posing a structural risk to TransAct's core business and long-term revenue growth.
  • Increased competitive pressure, particularly on pricing for POS automation and legacy products, was highlighted as a factor in decreased revenues and margins, suggesting rising threats from low-cost global vendors and integrated POS/back-office solution providers, which could further compress margins and earnings.
  • Customer concentration risk remains-sales are heavily reliant on large QSR (quick service restaurant) clients and a few major OEMs in casino and gaming; loss or scaling back of key contracts or disruptions in these sectors would introduce significant revenue volatility and net margin risk.
  • A slow transition from legacy revenue streams is evident, with TSG (TransAct Services Group) and POS automation sales now at normalized but much lower run rates, indicating rising obsolescence risk and stagnant or declining revenues from traditional segments if not effectively offset by new solutions.
  • The acquisition and in-housing of core BOHA! source code, while promising longer-term control and cost savings, will not become fully cost-effective or accretive on a P&L basis for 4–5 years, incurring upfront costs and heightened R&D expenses, potentially impacting short
  • to medium-term net earnings if recurring revenue fails to accelerate sufficiently.

Valuation

How have all the factors above been brought together to estimate a fair value?
  • The analysts have a consensus price target of $5.0 for TransAct Technologies based on their expectations of its future earnings growth, profit margins and other risk factors.
  • In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $64.5 million, earnings will come to $4.0 million, and it would be trading on a PE ratio of 16.0x, assuming you use a discount rate of 8.4%.
  • Given the current share price of $4.2, the analyst price target of $5.0 is 16.0% 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.

How well do narratives help inform your perspective?

Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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