ASX:APX

Stock Analysis Report

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Executive Summary

Appen Limited, together with its subsidiaries, provides data solutions and services for machine learning and artificial intelligence applications for technology companies, auto manufacturers, and government agencies in Australia, the United States, and internationally.


Snowflake Analysis

Flawless balance sheet with reasonable growth potential.

Share Price & News

How has Appen's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: APX's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

2.0%

APX

5.0%

AU IT

4.8%

AU Market


1 Year Return

18.3%

APX

21.7%

AU IT

-10.6%

AU Market

Return vs Industry: APX underperformed the Australian IT industry which returned 21.3% over the past year.

Return vs Market: APX exceeded the Australian Market which returned -10.3% over the past year.


Shareholder returns

APXIndustryMarket
7 Day2.0%5.0%4.8%
30 Day21.5%26.2%5.5%
90 Day38.7%15.8%-10.1%
1 Year18.8%18.3%23.6%21.7%-7.0%-10.6%
3 Year747.2%732.4%41.1%30.5%10.3%-4.3%
5 Year4884.6%4566.7%120.6%95.6%28.3%0.7%

Price Volatility Vs. Market

How volatile is Appen's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Appen undervalued compared to its fair value and its price relative to the market?

31.1%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: APX (A$30.8) is trading below our estimate of fair value (A$44.79)

Significantly Below Fair Value: APX is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: APX is poor value based on its PE Ratio (87.3x) compared to the IT industry average (22.7x).

PE vs Market: APX is poor value based on its PE Ratio (87.3x) compared to the Australian market (15.5x).


Price to Earnings Growth Ratio

PEG Ratio: APX is poor value based on its PEG Ratio (3.3x)


Price to Book Ratio

PB vs Industry: APX is overvalued based on its PB Ratio (7.7x) compared to the AU IT industry average (1.9x).


Next Steps

Future Growth

How is Appen forecast to perform in the next 1 to 3 years based on estimates from 9 analysts?

26.5%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: APX's forecast earnings growth (26.5% per year) is above the savings rate (2.3%).

Earnings vs Market: APX's earnings (26.5% per year) are forecast to grow faster than the Australian market (15% per year).

High Growth Earnings: earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: APX's revenue (17.9% per year) is forecast to grow faster than the Australian market (4.3% per year).

High Growth Revenue: APX's revenue (17.9% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: APX's Return on Equity is forecast to be low in 3 years time (19.3%).


Next Steps

  • Explore growth companies in the Software industry.

Past Performance

How has Appen performed over the past 5 years?

48.4%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: APX has high quality earnings.

Growing Profit Margin: APX's current net profit margins (7.8%) are lower than last year (11.5%).


Past Earnings Growth Analysis

Earnings Trend: APX's earnings have grown significantly by 48.4% per year over the past 5 years.

Accelerating Growth: APX's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: APX had negative earnings growth (-0.3%) over the past year, making it difficult to compare to the IT industry average (-0.3%).


Return on Equity

High ROE: APX's Return on Equity (8.6%) is considered low.


Next Steps

Financial Health

How is Appen's financial position?


Financial Position Analysis

Short Term Liabilities: APX's short term assets (A$202.6M) exceed its short term liabilities (A$128.8M).

Long Term Liabilities: APX's short term assets (A$202.6M) exceed its long term liabilities (A$23.6M).


Debt to Equity History and Analysis

Debt Level: APX is debt free.

Reducing Debt: APX had no debt 5 years ago.

Debt Coverage: APX has no debt, therefore it does not need to be covered by operating cash flow.

Interest Coverage: APX has no debt, therefore coverage of interest payments is not a concern.


Balance Sheet


Next Steps

Dividend

What is Appen's current dividend yield, its reliability and sustainability?

0.32%

Current Dividend Yield


Dividend Yield vs Market

Notable Dividend: APX's dividend (0.32%) isn’t notable compared to the bottom 25% of dividend payers in the Australian market (2.61%).

High Dividend: APX's dividend (0.32%) is low compared to the top 25% of dividend payers in the Australian market (6.69%).


Stability and Growth of Payments

Stable Dividend: APX is not paying a notable dividend for the Australian market, therefore no need to check if payments are stable.

Growing Dividend: APX is not paying a notable dividend for the Australian market, therefore no need to check if payments are increasing.


Current Payout to Shareholders

Dividend Coverage: APX is not paying a notable dividend for the Australian market.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of APX's dividend in 3 years as they are not forecast to pay a notable one for the Australian market.


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

1.6yrs

Average management tenure


CEO

Mark Ronald Brayan (55yo)

4.83yrs

Tenure

AU$1,732,620

Compensation

Mr. Mark Ronald Gerard Brayan, MBA, has been the Chief Executive Officer and Managing Director of Appen Limited since July 13, 2015. Mr. Brayan served as the Chief Executive Officer and Managing Director  ...


CEO Compensation Analysis

Compensation vs Market: Mark Ronald's total compensation ($USD1.15M) is below average for companies of similar size in the Australian market ($USD2.24M).

Compensation vs Earnings: Mark Ronald's compensation has increased by more than 20% whilst company earnings have fallen more than 20% in the past year.


Leadership Team

NamePositionTenureCompensationOwnership
Mark Ronald Brayan
MD, CEO & Executive Director4.83yrsAU$1.73m0.42% A$15.8m
Kevin Levine
Chief Financial Officer4.33yrsAU$1.06m0.090% A$3.4m
Tom Sharkey
Senior Vice President of Client Services1.83yrsAU$659.64k0.0070% A$262.3k
Wilson Pang
Chief Technology Officer1.42yrsno datano data
Jon Kondo
Senior Vice President of Sales & Marketing1.33yrsno datano data
Kerri Reynolds
Senior Vice President of HR & Crowd Sourcing Operations3.17yrsno datano data
Roc Tian
Senior Vice President of China1.33yrsno datano data
David Poirier
Senior Vice President of Figure Eight Federalno datano datano data
Carl Middlehurst
Company Secretary1.17yrsno datano data

1.6yrs

Average Tenure

Experienced Management: APX's management team is not considered experienced ( 1.5 years average tenure), which suggests a new team.


Board Members

NamePositionTenureCompensationOwnership
Mark Ronald Brayan
MD, CEO & Executive Director4.83yrsAU$1.73m0.42% A$15.8m
Christopher Vonwiller
Non-Executive Chairmanno dataAU$116.30k9.09% A$340.7m
William Pulver
Independent Non-Executive Director7.33yrsAU$89.79k0.50% A$18.7m
Deena Shiff
Independent Non-Executive Director5yrsAU$76.25k0.041% A$1.6m
Stephen Hasker
Independent Non-Executive Director5yrsAU$76.25k0.041% A$1.5m
Robin Low
Independent Non-Executive Director5.58yrsAU$91.25k0.14% A$5.3m
Vanessa Liu
Independent Non Executive Director0.17yrno datano data

5.0yrs

Average Tenure

58.5yo

Average Age

Experienced Board: APX's board of directors are considered experienced (5 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Appen Limited's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Appen Limited
  • Ticker: APX
  • Exchange: ASX
  • Founded: 1996
  • Industry: IT Consulting and Other Services
  • Sector: Software
  • Market Cap: AU$3.747b
  • Shares outstanding: 121.65m
  • Website: https://www.appen.com

Number of Employees


Location

  • Appen Limited
  • 9 Help Street
  • Level 6
  • Chatswood
  • New South Wales
  • 2067
  • Australia

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
APXASX (Australian Securities Exchange)YesOrdinary SharesAUAUDJan 2015
APXCHIA (Chi-X Australia)YesOrdinary SharesAUAUDJan 2015
APPE.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDJan 2015
433DB (Deutsche Boerse AG)YesOrdinary SharesDEEURJan 2015

Biography

Appen Limited, together with its subsidiaries, provides data solutions and services for machine learning and artificial intelligence applications for technology companies, auto manufacturers, and government agencies in Australia, the United States, and internationally. It operates through two divisions, Content Relevance and Language Resources. The Content Relevance division offers annotated data used in search technology embedded in Web, e-commerce, and social engagement for enhancing relevance and accuracy of search engines, social media applications, and e-commerce. The Language Resources division provides annotated speech, natural language, and image data used in speech and image recognizers, machine translation, speech synthesizers, and other machine-learning technologies. The company was formerly known as Appen Holdings Pty Limited and changed its name to Appen Limited in October 2014. Appen Limited was founded in 1996 and is headquartered in Chatswood, Australia. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/05/31 10:50
End of Day Share Price2020/05/29 00:00
Earnings2019/12/31
Annual Earnings2019/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.