Major Estimate Revision • Oct 03
Consensus revenue estimates increase by 11% The consensus outlook for revenues in fiscal year 2024 has improved. 2024 revenue forecast increased from €28.0m to €31.0m. EPS estimate increased from €0.176 to €0.259 per share. Net income forecast to grow 8.5% next year vs 60% growth forecast for Professional Services industry in Italy. Consensus price target of €4.90 unchanged from last update. Share price was steady at €3.48 over the past week. New Risk • Oct 02
New major risk - Revenue and earnings growth Earnings are forecast to decline by an average of 2.2% per year for the foreseeable future. This is considered a major risk. Ultimately, shareholders want to see a good return on their investment and that generally comes from sharing in the company's profits. If profits are expected to decline, then in most cases the share price will decline over time as well. In addition, if the company pays dividends it will also likely need to reduce or cut them, striking a dual blow to total shareholder returns. Currently, the following risks have been identified for the company: Major Risk Earnings are forecast to decline by an average of 2.2% per year for the foreseeable future. Minor Risks Share price has been volatile over the past 3 months (5.5% average weekly change). Market cap is less than US$100m (€88.4m market cap, or US$97.8m). Reported Earnings • Oct 01
First half 2024 earnings released First half 2024 results: Revenue: €16.3m (up 20% from 1H 2023). Net income: €4.11m (up 165% from 1H 2023). Profit margin: 25% (up from 11% in 1H 2023). The increase in margin was driven by higher revenue. Revenue is forecast to grow 10% p.a. on average during the next 2 years, compared to a 11% growth forecast for the Professional Services industry in Italy. New Risk • Aug 05
New major risk - Share price stability The company's share price has been highly volatile over the past 3 months. It is more volatile than 90% of Italian stocks, typically moving 6.7% a week. This is considered a major risk. Share price volatility increases the risk of potential losses in the short-term as the stock tends to have larger drops in price more frequently than other stocks. It may also indicate the stock is highly sensitive to market conditions or economic conditions rather than being sensitive to its own business performance, which may also be inconsistent. Currently, the following risks have been identified for the company: Major Risks Share price has been highly volatile over the past 3 months (6.7% average weekly change). High level of non-cash earnings (24% accrual ratio). Minor Risks Profit margins are more than 30% lower than last year (12% net profit margin). Market cap is less than US$100m (€83.5m market cap, or US$91.6m). New Risk • Apr 16
New minor risk - Profit margin trend The company's profit margins are lower than last year and have reduced by more than 30%. Net profit margin: 12% Last year net profit margin: 17% This is considered a minor risk. A large drop in profit margin could indicate the company does not have strong competitive advantages or it is yet to establish itself and its core business. Even if it is a well established business, this may make it a much riskier investment than one that has a combination of proven competitive advantages and a stable or growing profit margin. Currently, the following risks have been identified for the company: Major Risk High level of non-cash earnings (24% accrual ratio). Minor Risk Profit margins are more than 30% lower than last year (12% net profit margin). New Risk • Apr 14
New minor risk - Financial data availability The company's latest financial reports are more than 6 months old. Last reported fiscal period ended June 2023. This is considered a minor risk. If the company has not reported its earnings on time, it may have been delayed due to audit problems or it may be finding it difficult to reconcile its accounts. Currently, the following risks have been identified for the company: Major Risk High level of non-cash earnings (24% accrual ratio). Minor Risk Latest financial reports are more than 6 months old (reported June 2023 fiscal period end). Valuation Update With 7 Day Price Move • Dec 30
Investor sentiment improved over the past week After last week's 15% share price gain to €4.40, the stock trades at a forward P/E ratio of 24x. Average forward P/E is 10x in the Professional Services industry in Italy. Total loss to shareholders of 25% over the past year. Buying Opportunity • Dec 06
Now 20% undervalued The stock has been flat over the last 90 days. The fair value is estimated to be €5.00, however this is not to be taken as a buy recommendation but rather should be used as a guide only. Revenue is forecast to grow by 35% in 2 years. Earnings is forecast to grow by 43% in the next 2 years. Price Target Changed • Nov 16
Price target decreased to €5.30 Down from €6.30, the current price target is provided by 1 analyst. New target price is 59% above last closing price of €3.34. Stock is down 41% over the past year. Reported Earnings • Sep 24
First half 2022 earnings released: EPS: €0 (vs €1.04 in 1H 2021) First half 2022 results: EPS: €0. Revenue: €11.0m (up 8.0% from 1H 2021). Net income: €2.11m (up 11% from 1H 2021). Profit margin: 19% (in line with 1H 2021). Revenue is forecast to grow 16% p.a. on average during the next 3 years, compared to a 9.5% growth forecast for the Professional Services industry in Italy. Buying Opportunity • Sep 14
Now 20% undervalued after recent price drop Over the last 90 days, the stock is down 1.0%. The fair value is estimated to be €4.93, however this is not to be taken as a buy recommendation but rather should be used as a guide only. For the next 3 years, revenue is forecast to grow by 15% per annum. Earnings is also forecast to grow by 14% per annum over the same time period. Buying Opportunity • Aug 22
Now 21% undervalued after recent price drop Over the last 90 days, the stock is down 18%. The fair value is estimated to be €4.90, however this is not to be taken as a buy recommendation but rather should be used as a guide only. For the next 3 years, revenue is forecast to grow by 15% per annum. Earnings is also forecast to grow by 14% per annum over the same time period. Buying Opportunity • Jul 21
Now 21% undervalued after recent price drop Over the last 90 days, the stock is down 24%. The fair value is estimated to be €4.87, however this is not to be taken as a buy recommendation but rather should be used as a guide only. For the next 3 years, revenue is forecast to grow by 15% per annum. Earnings is also forecast to grow by 14% per annum over the same time period. Valuation Update With 7 Day Price Move • Jun 14
Investor sentiment deteriorated over the past week After last week's 16% share price decline to €4.09, the stock trades at a forward P/E ratio of 23x. Average forward P/E is 11x in the Professional Services industry in Italy. Valuation Update With 7 Day Price Move • May 19
Investor sentiment improved over the past week After last week's 17% share price gain to €4.77, the stock trades at a forward P/E ratio of 26x. Average forward P/E is 17x in the Professional Services industry in Italy. Reported Earnings • Apr 20
Full year 2021 earnings: Revenues miss analyst expectations Full year 2021 results: Revenue: €21.3m (up 23% from FY 2020). Net income: €3.74m (up 370% from FY 2020). Profit margin: 18% (up from 4.6% in FY 2020). The increase in margin was driven by higher revenue. Revenue missed analyst estimates by 5.1%. Over the next year, revenue is forecast to grow 13%, compared to a 17% growth forecast for the industry in Italy.