Enghouse Systems Limited's (TSE:ENGH) Intrinsic Value Is Potentially 89% Above Its Share Price
Today we'll do a simple run through of a valuation method used to estimate the attractiveness of Enghouse Systems...
Canadian (TSX) Software Industry Analysis
UpdatedNov 28, 2021
DataAggregated Company Financials
Companies106
- 7D-1.4%
- 3M-9.4%
- 1Y37.1%
- YTD24.6%
Over the last 7 days, the Software industry has dropped 1.4%, driven by a pullback from Lightspeed Commerce of 7.2%. This takes the industry's 12 month performance to a gain of 37%.
Industry Valuation and Performance
Has the Canadian Software Industry valuation changed over the past few years?
| Date | Market Cap | Revenue | Earnings | PE |
|---|---|---|---|---|
| Tue, 30 Nov 2021 | CA$109.4b | CA$12.0b | -CA$3,466,634,780.00 | 71.3x |
| Thu, 28 Oct 2021 | CA$115.1b | CA$10.9b | -CA$3,421,869,076.00 | 55.7x |
| Sat, 25 Sep 2021 | CA$119.5b | CA$11.1b | -CA$3,367,129,263.00 | 45x |
| Mon, 23 Aug 2021 | CA$111.4b | CA$10.9b | -CA$3,271,006,370.50 | 45.7x |
| Sat, 10 Jul 2021 | CA$96.9b | CA$10.7b | -CA$3,272,721,025.55 | 63.3x |
| Fri, 02 Apr 2021 | CA$85.3b | CA$9.2b | -CA$1,139,117,512.97 | 61.9x |
| Mon, 04 Jan 2021 | CA$77.0b | CA$8.9b | -CA$629,089,098.85 | 38.6x |
| Thu, 08 Oct 2020 | CA$60.3b | CA$8.7b | -CA$545,257,734.96 | 39.5x |
| Wed, 01 Jul 2020 | CA$57.2b | CA$8.5b | -CA$729,677,779.40 | 59.5x |
| Sat, 04 Apr 2020 | CA$43.1b | CA$8.5b | CA$146.5m | 33.2x |
| Tue, 07 Jan 2020 | CA$46.2b | CA$7.7b | CA$48.3m | 21.7x |
| Mon, 30 Sep 2019 | CA$44.8b | CA$7.5b | CA$14.6m | 25.6x |
| Thu, 04 Jul 2019 | CA$44.6b | CA$7.3b | CA$80.9m | 25.3x |
| Sun, 07 Apr 2019 | CA$42.6b | CA$7.1b | -CA$65,046,928.28 | 31.2x |
| Wed, 09 Jan 2019 | CA$31.8b | CA$6.9b | CA$151.8m | 35.2x |
PE Ratio
32.3x
Current Industry PE: Investors are more optimistic on the industry, considering it's trading at a PE ratio of 66.8x which is higher than its 3-year average PE of 39.8x. It appears they are confident that earnings will grow faster in the future than they have historically.
Past Earnings Growth: Total earnings for the Software industry have declined over the last three years, with the industry now making a loss overall. But revenues have grown 24% per year. This means that although more sales are being generated, either the cost of doing business or the level of investment back into businesses has increased, which has decreased profits.
Industry Trends
Which industries have driven the changes within the Canadian Software industry?
| Systems Software | -1.32% | |
| Application Software | -1.46% | |
Industry PE: Investors are most optimistic about the Systems Software industry, which is trading close to its 3-year average PE ratio of 82.7x. However analysts are expecting annual earnings growth of 58%, which is lower than the prior year's growth of 115% per year. So the market might believe that analysts are underestimating future growth. Meanwhile, investors are most pessimistic about the Application Software industry. Although, investor sentiment seems to have improved given its trading above its 3-year average of 32.1x.
Forecasted Growth: Analysts are most optimistic on the Systems Software industry, expecting annual earnings growth of 58% over the next 5 years. However this is lower than its past earnings growth rate of 115% per year. Meanwhile, the Application Software industry is expected to see its earnings grow by 47% per year over the next few years.
Top Stock Gainers and Losers
Which companies have driven the market over the last 7 days?
| Company | 7D | 1Y | Valuation | |
|---|---|---|---|---|
| DCBO Docebo | 4.9%+CA$144.3m | 39.0% | PS25.9x | |
| WE WeCommerce Holdings | 22.9%+CA$104.9m | n/a | PS17.3x | |
| CVO Coveo Solutions | 4.4%+CA$70.7m | n/a | PS18.3x | |
| MAGT Magnet Forensics | 5.2%+CA$69.7m | n/a | PE99.9x | |
| VXTR Voxtur Analytics | 17.1%+CA$67.8m | n/a | PS10.7x |
