ASX:CL1

Stock Analysis Report

Executive Summary

Class Limited develops and distributes cloud-based accounting, investment reporting, and administration software for accountants, administrators, and advisers in Australia.

Rewards

Trading at 3.4% below its fair value

Earnings are forecast to grow 4.57% per year

Earnings have grown 22.1% per year over the past 5 years

Risk Analysis

High level of non-cash earnings

Unstable dividend track record



Snowflake Analysis

Flawless balance sheet with moderate growth potential.


Similar Companies

Share Price & News

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


Latest Share Price and Events

Stable Share Price: CL1 has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-1.0%

CL1

0.8%

AU Software

1.4%

AU Market


1 Year Return

39.6%

CL1

40.1%

AU Software

16.1%

AU Market

Return vs Industry: CL1 matched the Australian Software industry which returned 40.1% over the past year.

Return vs Market: CL1 exceeded the Australian Market which returned 16.1% over the past year.


Shareholder returns

CL1IndustryMarket
7 Day-1.0%0.8%1.4%
30 Day1.5%4.1%0.5%
90 Day1.5%7.8%4.8%
1 Year44.8%39.6%41.3%40.1%21.2%16.1%
3 Year-27.5%-32.2%167.1%155.2%37.0%18.6%
5 Yearn/a173.8%153.0%51.7%17.8%

Price Volatility Vs. Market

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


Simply Wall St News

Valuation

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

3.4%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: CL1 (A$2.08) is trading below our estimate of fair value (A$2.15)

Significantly Below Fair Value: CL1 is trading below fair value, but not by a significant amount.


Price To Earnings Ratio

PE vs Industry: CL1 is good value based on its PE Ratio (27.2x) compared to the Software industry average (36.6x).

PE vs Market: CL1 is poor value based on its PE Ratio (27.2x) compared to the Australian market (18.8x).


Price to Earnings Growth Ratio

PEG Ratio: CL1 is poor value based on its PEG Ratio (5.9x)


Price to Book Ratio

PB vs Industry: CL1 is overvalued based on its PB Ratio (8.4x) compared to the AU Software industry average (4.2x).


Next Steps

Future Growth

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

4.6%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: CL1's forecast earnings growth (4.6% per year) is above the savings rate (1.1%).

Earnings vs Market: CL1's earnings (4.6% per year) are forecast to grow slower than the Australian market (9.3% per year).

High Growth Earnings: CL1's earnings are forecast to grow, but not significantly.

Revenue vs Market: CL1's revenue (12.3% per year) is forecast to grow faster than the Australian market (4.1% per year).

High Growth Revenue: CL1's revenue (12.3% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: CL1's Return on Equity is forecast to be high in 3 years time (24.4%)


Next Steps

Past Performance

How has Class performed over the past 5 years?

22.1%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: CL1 has a high level of non-cash earnings.

Growing Profit Margin: CL1's current net profit margins (23.4%) are lower than last year (25.6%).


Past Earnings Growth Analysis

Earnings Trend: CL1's earnings have grown significantly by 22.1% per year over the past 5 years.

Accelerating Growth: CL1's earnings growth over the past year (3.2%) is below its 5-year average (22.1% per year).

Earnings vs Industry: CL1 earnings growth over the past year (3.2%) underperformed the Software industry 23.8%.


Return on Equity

High ROE: CL1's Return on Equity (31.1%) is considered high.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Class's financial position?


Financial Position Analysis

Short Term Liabilities: CL1's short term assets (A$22.6M) exceed its short term liabilities (A$4.7M).

Long Term Liabilities: CL1's short term assets (A$22.6M) exceed its long term liabilities (A$2.3M).


Debt to Equity History and Analysis

Debt Level: CL1 is debt free.

Reducing Debt: CL1 has not had any debt for past 5 years.

Debt Coverage: CL1 has no debt, therefore it does not need to be covered by operating cash flow.

Interest Coverage: CL1 has no debt, therefore coverage of interest payments is not a concern.


Balance Sheet

Inventory Level: CL1 has a low level of unsold assets or inventory.

Debt Coverage by Assets: Insufficient data to determine if CL1's debt is covered by short term assets.


Next Steps

Dividend

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

2.40%

Current Dividend Yield


Dividend Yield vs Market

company2.4%marketbottom25%2.3%markettop25%5.5%industryaverage1.1%forecastin3Years2.3%

Current dividend yield vs market & industry

Notable Dividend: CL1's dividend (2.4%) is higher than the bottom 25% of dividend payers in the Australian market (2.29%).

High Dividend: CL1's dividend (2.4%) is low compared to the top 25% of dividend payers in the Australian market (5.5%).


Stability and Growth of Payments

Stable Dividend: CL1 has been paying a dividend for less than 10 years and during this time payments have been volatile.

Growing Dividend: CL1's dividend payments have increased, but the company has only paid a dividend for 4 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonable payout ratio (65.3%), CL1's dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: CL1's dividends in 3 years are forecast to be covered by earnings (67.1% payout ratio).


Next Steps

Management

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

0.8yrs

Average management tenure


CEO

Andrew Russell 0

0.8yrs

Tenure

AU$852,021

Compensation

Mr. Andrew J. Russell serves as Managing Director, Chief Executive Officer and Director of Class Limited since May 14, 2019. He served as a General Manager of Product and Distribution at Mortgage Choice Lt ...


CEO Compensation Analysis

Compensation vs Market: Andrew's total compensation ($USD572.48K) is about average for companies of similar size in the Australian market ($USD456.30K).

Compensation vs Earnings: Insufficient data to compare Andrew's compensation with company performance.


Leadership Team

NamePositionTenureCompensationOwnership
Andrew Russell
MD, CEO & Director0.8yrsAU$852.02k0.094% A$239.5k
Glenn Day
CFO & Company Secretary0yrsAU$385.33k0.21% A$525.2k
Panos Alexandratos
Chief Operating Officer0yrsno datano data
Ebby Carson
Investor Relations Manager & Asst Co. Secretary0yrsno datano data
Jason Wilson
Chief Product & Marketing Officer0.6yrsno datano data
James Panaretos
Chief Sales Officer0.08yrsno datano data
Jacqui Levings
Chief People Officer2.1yrsno datano data
Glenn Poynton
Chief Strategy Officer1.1yrsno datano data
Amreeta Abbott
Chief Growth Officer of NowInfinity0yrsno datano data

0.8yrs

Average Tenure

Experienced Management: CL1's management team is not considered experienced ( 0.8 years average tenure), which suggests a new team.


Board Members

NamePositionTenureCompensationOwnership
Andrew Russell
MD, CEO & Director0.8yrsAU$852.02k0.094% A$239.5k
Matthew Quinn
Non-Executive Chairman3yrsAU$142.35k0.11% A$282.9k
Simon Martin
Independent Non-Executive Director0.3yrsno datano data
Nicolette Rubinsztein
Independent Non-Executive Director2.8yrsAU$98.55k0.12% A$317.9k
Kathryn Foster
Independent Non-Executive Director4.6yrsAU$98.55k0.13% A$337.4k
Robert Bazzani
Independent Non-Executive Director0.08yrsno datano data

1.8yrs

Average Tenure

Experienced Board: CL1's board of directors are not considered experienced ( 1.8 years average tenure), which suggests a new board.


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

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


Key Information

  • Name: Class Limited
  • Ticker: CL1
  • Exchange: ASX
  • Founded: 2005
  • Industry: Application Software
  • Sector: Software
  • Market Cap: AU$254.705m
  • Shares outstanding: 122.45m
  • Website: https://www.class.com.au

Number of Employees


Location

  • Class Limited
  • 228 Pitt Street
  • Level 3
  • Sydney
  • New South Wales
  • 2000
  • Australia

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
CL1ASX (Australian Securities Exchange)YesOrdinary SharesAUAUDDec 2015
CL1CHIA (Chi-X Australia)YesOrdinary SharesAUAUDDec 2015
1X6DB (Deutsche Boerse AG)YesOrdinary SharesDEEURDec 2015

Biography

Class Limited develops and distributes cloud-based accounting, investment reporting, and administration software for accountants, administrators, and advisers in Australia. The company offers Class Super, a cloud based self-managed super fund SMSF administration software to streamline various aspects of SMSF administration. It also provides Class Portfolio, a cloud software solution for streamlining investment portfolio accounting, administration, and reporting for companies, trusts, and individuals. Class Limited was founded in 2005 and is based in Sydney, Australia. Class Limited operates as a subsidiary of Deutsche Bank Aktiengesellschaft 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/16 10:47
End of Day Share Price2020/02/14 00:00
Earnings2019/06/30
Annual Earnings2019/06/30


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.