ReadyTech Holdings (ASX:RDY) - Share price, News & Analysis

Q: What is the Fair Price of RDY when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

RDY (A$3.26) is trading below our estimate of [[fair value]] (A$4.74)

RDY fundamental analysis
Snowflake Score
Valuation	3/6
Future Growth	4/6
Past Performance	5/6
Financial Health	3/6
Dividends	0/6

RDY Stock Overview

ReadyTech Holdings Limited provides SaaS technology for education and work pathways, workforce solutions, and government and justice markets in Australia.

Rewards

Trading at 31.2% below our estimate of its fair value

Earnings are forecast to grow 30.1% per year

Earnings grew by 308.1% over the past year

Risk Analysis

Shareholders have been diluted in the past year

ReadyTech Holdings Competitors

Symbio Holdings

ASX:SYM

AU$358.0m

Bravura Solutions

ASX:BVS

AU$421.0m

Nuix

ASX:NXL

AU$225.3m

Infomedia

ASX:IFM

AU$563.6m

Price History & Performance

Summary of all time highs, changes and price drops for ReadyTech Holdings
Historical stock prices
Current Share Price	AU$3.26
52 Week High	AU$4.30
52 Week Low	AU$2.50
Beta	1.02
1 Month Change	6.89%
3 Month Change	10.51%
1 Year Change	28.85%
3 Year Change	87.36%
5 Year Change	n/a
Change since IPO	83.15%

Shareholder Returns

	RDY	AU Software	AU Market
7D	4.8%	0.06%	0.8%
1Y	28.9%	-15.1%	-4.9%

Return vs Industry: RDY exceeded the Australian Software industry which returned -15.1% over the past year.

Return vs Market: RDY exceeded the Australian Market which returned -4.9% over the past year.

Price Volatility

Is RDY's price volatile compared to industry and market?
RDY volatility
RDY Average Weekly Movement	5.8%
Software Industry Average Movement	12.1%
Market Average Movement	10.5%
10% most volatile stocks in AU Market	17.8%
10% least volatile stocks in AU Market	4.6%

Stable Share Price: RDY is less volatile than 75% of Australian stocks over the past 3 months, typically moving +/- 6% a week.

Volatility Over Time: RDY's weekly volatility (6%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
1998	365	Marc Washbourne	https://readytech.com.au

ReadyTech Holdings Limited provides SaaS technology for education and work pathways, workforce solutions, and government and justice markets in Australia. It operates in three segments: Education, Workforce Solutions, and Government and Justice. The Education segment offers cloud-based student and learning management systems for education and training providers to manage the student lifecycle, including student enrolment and course completion.

ReadyTech Holdings Fundamentals Summary

How do ReadyTech Holdings's earnings and revenue compare to its market cap?
RDY fundamental statistics
Market Cap	AU$372.28m
Earnings (TTM)	AU$8.79m
Revenue (TTM)	AU$78.28m

42.3x

P/E Ratio

4.8x

P/S Ratio

Is RDY overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
RDY income statement (TTM)
Revenue	AU$78.28m
Cost of Revenue	AU$46.66m
Gross Profit	AU$31.63m
Other Expenses	AU$22.84m
Earnings	AU$8.79m

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)	0.077
Gross Margin	40.40%
Net Profit Margin	11.23%
Debt/Equity Ratio	34.6%

How did RDY perform over the long term?

See historical performance and comparison

We’ve recently updated our valuation analysis.

Valuation

Is RDY undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

3/6

Valuation Score 3/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for RDY?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for RDY. This is calculated by dividing RDY's market cap by their current preferred multiple.
What is RDY's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	AU$372.28m

RDY key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	5.1x
Enterprise Value/EBITDA	26.9x
PEG Ratio	1.4x

Price to Earnings Ratio vs Peers

How does RDY's PE Ratio compare to its peers?

RDY PE Ratio vs Peers

The above table shows the PE ratio for RDY vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	21.6x
SYM Symbio Holdings	30.2x	13.6%	AU$358.0m
BVS Bravura Solutions	10.3x	6.1%	AU$421.0m
NXL Nuix	n/a	n/a	AU$225.3m
IFM Infomedia	55.6x	32.7%	AU$563.6m
RDY ReadyTech Holdings	42.3x	30.1%	AU$372.3m

Price-To-Earnings vs Peers: RDY is expensive based on its Price-To-Earnings Ratio (42.3x) compared to the peer average (21.6x).

Price to Earnings Ratio vs Industry

How does RDY's PE Ratio compare vs other companies in the AU Software Industry?

Price-To-Earnings vs Industry: RDY is expensive based on its Price-To-Earnings Ratio (42.3x) compared to the Australian Software industry average (27.6x)

Price to Earnings Ratio vs Fair Ratio

What is RDY's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

RDY PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	42.3x
Fair PE Ratio	40.5x

Price-To-Earnings vs Fair Ratio: RDY is expensive based on its Price-To-Earnings Ratio (42.3x) compared to the estimated Fair Price-To-Earnings Ratio (40.5x).

Share Price vs Fair Value

What is the Fair Price of RDY when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: RDY (A$3.26) is trading below our estimate of fair value (A$4.74)

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

Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is more than 20% higher than the current share price and analysts are within a statistically confident range of agreement.

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Future Growth

How is ReadyTech Holdings forecast to perform in the next 1 to 3 years based on estimates from 5 analysts?

Future Growth Score

4/6

Future Growth Score 4/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

30.1%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: RDY's forecast earnings growth (30.1% per year) is above the savings rate (1.8%).

Earnings vs Market: RDY's earnings (30.1% per year) are forecast to grow faster than the Australian market (6.2% per year).

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

Revenue vs Market: RDY's revenue (14.9% per year) is forecast to grow faster than the Australian market (5% per year).

High Growth Revenue: RDY's revenue (14.9% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: RDY's Return on Equity is forecast to be low in 3 years time (17%).

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Past Performance

How has ReadyTech Holdings performed over the past 5 years?

Past Performance Score

5/6

Past Performance Score 5/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

35.9%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: RDY has high quality earnings.

Growing Profit Margin: RDY's current net profit margins (11.2%) are higher than last year (4.3%).

Past Earnings Growth Analysis

Earnings Trend: RDY's earnings have grown significantly by 35.9% per year over the past 5 years.

Accelerating Growth: RDY's earnings growth over the past year (308.1%) exceeds its 5-year average (35.9% per year).

Earnings vs Industry: RDY earnings growth over the past year (308.1%) exceeded the Software industry 24.9%.

Return on Equity

High ROE: RDY's Return on Equity (9%) is considered low.

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Financial Health

How is ReadyTech Holdings's financial position?

Financial Health Score

3/6

Financial Health Score 3/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: RDY's short term assets (A$23.3M) do not cover its short term liabilities (A$49.4M).

Long Term Liabilities: RDY's short term assets (A$23.3M) do not cover its long term liabilities (A$38.4M).

Debt to Equity History and Analysis

Debt Level: RDY's net debt to equity ratio (25.2%) is considered satisfactory.

Reducing Debt: Insufficient data to determine if RDY's debt to equity ratio has reduced over the past 5 years.

Debt Coverage: RDY's debt is well covered by operating cash flow (50.1%).

Interest Coverage: RDY's interest payments on its debt are well covered by EBIT (10.6x coverage).

Balance Sheet

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Dividend

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

Dividend Score

0/6

Dividend Score 0/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Cash Flow Coverage

1.23%

Forecast Dividend Yield

Dividend Yield vs Market

Notable Dividend: Unable to evaluate RDY's dividend yield against the bottom 25% of dividend payers, as the company has not reported any recent payouts.

High Dividend: Unable to evaluate RDY's dividend yield against the top 25% of dividend payers, as the company has not reported any recent payouts.

Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if RDY's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if RDY's dividend payments have been increasing.

Earnings Payout to Shareholders

Earnings Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: Unable to calculate sustainability of dividends as RDY has not reported any payouts.

Discover strong dividend paying companies

Management

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

2.7yrs

Average management tenure

CEO

Marc Washbourne

23.58yrs

Tenure

AU$845,280

Compensation

Mr. Marc Raymond Washbourne has been the Chief Executive Officer of ReadyTech Holdings Limited since 1999 and as its Executive Director since March 8, 2019. He is a founder of the ReadyTech business. With...

CEO Compensation Analysis

Compensation vs Market: Marc's total compensation ($USD587.41K) is about average for companies of similar size in the Australian market ($USD551.34K).

Compensation vs Earnings: Marc's compensation has increased by more than 20% in the past year.

Leadership Team

Experienced Management: RDY's management team is considered experienced (2.7 years average tenure).

Board Members

Experienced Board: RDY's board of directors are considered experienced (3.4 years average tenure).

Ownership

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

Insider Trading Volume

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

Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 11.8%.

Data	Last Updated (UTC time)
Company Analysis	2022/08/19 00:00
End of Day Share Price	2022/08/19 00:00
Earnings	2022/06/30
Annual Earnings	2022/06/30