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.

Snowflake

Flawless balance sheet with moderate growth potential.

Rewards

PE ratio (25.5x) is below the Software industry average (36x)

Revenue is forecast to grow by 8.64% next year

Earnings grew by 3.2% over the past year

Risk Analysis

High level of non-cash earnings

Unstable dividend track record

Highly volatile share price over past 3 months

Current net profit margin (23.4%) is lower than last year (25.6%)



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's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

0%

CL1

3.4%

AU Software

0.9%

AU Market


1 Year Return

9.2%

CL1

51.6%

AU Software

16.3%

AU Market

Return vs Industry: CL1 underperformed the Australian Software industry which returned 51.6% over the past year.

Return vs Market: CL1 underperformed the Australian Market which returned 16.3% over the past year.


Shareholder returns

CL1IndustryMarket
7 Day0%3.4%0.9%
30 Day29.1%0.4%0.6%
90 Day51.8%13.2%6.0%
1 Year13.3%9.2%52.9%51.6%23.0%16.3%
3 Year-32.9%-37.5%157.9%147.4%41.6%22.3%
5 Yearn/a179.1%156.8%57.7%22.5%

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?

25.45x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: CL1 (A$1.95) is trading above our estimate of fair value (A$1.39)

Significantly Below Fair Value: CL1 is trading above our estimate of fair value.


Price To Earnings Ratio

PE vs Industry: CL1 is good value based on its PE Ratio (25.5x) compared to the Software industry average (36x).

PE vs Market: CL1 is poor value based on its PE Ratio (25.5x) compared to the Australian market (18.5x).


Price to Earnings Growth Ratio

PEG Ratio: CL1 is poor value based on its PEG Ratio (10.1x)


Price to Book Ratio

PB vs Industry: CL1 is overvalued based on its PB Ratio (7.8x) compared to the AU Software industry average (4.3x).


Next Steps

Future Growth

How is Class forecast to perform in the next 1 to 3 years based on estimates from 4 analysts?

2.5%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: CL1's forecast earnings growth (2.5% per year) is above the savings rate (2.3%).

Earnings vs Market: CL1's earnings (2.5% per year) are forecast to grow slower than the Australian market (9.7% per year).

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

Revenue vs Market: CL1's revenue (9% per year) is forecast to grow faster than the Australian market (3.7% per year).

High Growth Revenue: CL1's revenue (9% 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 (24.5%)


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 22.6%.


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) exceeds its short term liabilities (A$4.7M)

Long Term Liabilities: CL1's short term assets (22.6M) exceeds its long term liabilities (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?

2.56%

Current Dividend Yield


Dividend Yield vs Market

company2.6%marketbottom25%2.4%markettop25%5.6%industryaverage1.1%forecastin3Years2.4%

Current dividend yield vs market & industry

Notable Dividend: CL1's dividend (2.56%) is higher than the bottom 25% of dividend payers in the Australian market (2.38%).

High Dividend: CL1's dividend (2.56%) is low compared to the top 25% of dividend payers in the Australian market (5.56%).


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 (72.9% payout ratio).


Next Steps

Management

What is the CEO of Class's salary, the management and board of directors tenure and is there insider trading?

0.8yrs

Average management tenure


CEO

Andrew Russell 0

0.5yrs

Tenure

0

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 ...


Management Age and Tenure

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 Age and Tenure

2.6yrs

Average Tenure

Experienced Board: CL1's board of directors are not considered experienced ( 2.6 years average tenure), which suggests a new board.


Insider Trading

Insider Buying: CL1 insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

BuyAU$3,936,61230 Sep 19
Pinnacle Fund Services Limited
EntityCompany
Shares2,583,868
Max PriceAU$1.57
BuyAU$14,831,19227 Sep 19
Hyperion Asset Management Limited
EntityCompany
Shares6,157,256
Max PriceAU$2.41
BuyAU$2,212,35216 Sep 19
Pinnacle Fund Services Limited
EntityCompany
Shares1,595,271
Max PriceAU$1.39
BuyAU$48,49510 Sep 19
Matthew Quinn
EntityIndividual
Role
Chairman of the Board
Non-Executive Chairman
Shares40,000
Max PriceAU$1.21
BuyAU$5,025,86003 Sep 19
Pinnacle Fund Services Limited
EntityCompany
Shares3,428,565
Max PriceAU$1.82
SellAU$942,82403 Sep 19
Pinnacle Fund Services Limited
EntityCompany
Shares548,265
Max PriceAU$1.75
BuyAU$47,90021 Aug 19
Matthew Quinn
EntityIndividual
Role
Chairman of the Board
Non-Executive Chairman
Shares36,000
Max PriceAU$1.33
BuyAU$19,99921 Aug 19
Andrew Russell
EntityIndividual
Role
Chief Executive Officer
MD, CEO & Director
Shares15,151
Max PriceAU$1.32
BuyAU$2,860,57117 May 19
Spheria Asset Management Pty Ltd
EntityCompany
Shares1,684,070
Max PriceAU$1.79
SellAU$1,818,18217 May 19
Spheria Asset Management Pty Ltd
EntityCompany
Shares1,034,514
Max PriceAU$1.84
BuyAU$174,69920 Mar 19
Nicolette Rubinsztein
EntityIndividual
Role
Member of the Board of Directors
Independent Non-Executive Director
Shares107,864
Max PriceAU$1.62
BuyAU$4,287,22727 Dec 18
Spheria Asset Management Pty Ltd
EntityCompany
Shares2,716,324
Max PriceAU$1.95

Ownership Breakdown

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


Management Team

  • Panos Alexandratos

    Chief Operating Officer

    • Tenure: 0yrs
  • Andrew Russell

    MD, CEO & Director

    • Tenure: 0.5yrs
  • Glenn Day

    CFO & Company Secretary

    • Tenure: 0yrs
    • Compensation: AU$376.33k
  • Jacqui Levings

    Chief People Officer

    • Tenure: 1.8yrs
  • Glenn Poynton

    Chief Strategy Officer

    • Tenure: 0.8yrs
  • Dan Coutts

    Chief Technology Officer

    • Tenure: 0.8yrs
  • Jason Wilson

    Chief Product & Marketing Officer

    • Tenure: 0.3yrs
  • Ebby Carson

    Investor Relations Manager

    • Tenure: 0yrs

Board Members

  • Matthew Quinn (57yo)

    Non-Executive Chairman

    • Tenure: 2.8yrs
    • Compensation: AU$142.35k
  • Chris Cuffe

    Independent Non-Executive Director

    • Tenure: 2.1yrs
    • Compensation: AU$63.81k
  • Nicolette Rubinsztein

    Independent Non-Executive Director

    • Tenure: 2.6yrs
    • Compensation: AU$90.34k
  • Andrew Russell

    MD, CEO & Director

    • Tenure: 0.5yrs
  • Kathryn Foster

    Independent Non-Executive Director

    • Tenure: 4.3yrs
    • Compensation: AU$90.34k

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$228.848m
  • Shares outstanding: 117.36m
  • 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,  ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/11/16 10:41
End of Day Share Price2019/11/15 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.