ASX:RKN

Stock Analysis Report

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Executive Summary

Reckon Limited provides software solutions in Australia, the United States, and internationally. More Details


Snowflake Analysis

Undervalued with acceptable track record.


Similar Companies

Share Price & News

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


Latest Share Price and Events

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


Market Performance


7 Day Return

5.1%

RKN

2.6%

AU Software

0.5%

AU Market


1 Year Return

16.3%

RKN

30.8%

AU Software

-5.6%

AU Market

Return vs Industry: RKN underperformed the Australian Software industry which returned 30.8% over the past year.

Return vs Market: RKN exceeded the Australian Market which returned -5.6% over the past year.


Shareholder returns

RKNIndustryMarket
7 Day5.1%2.6%0.5%
30 Day-7.3%13.3%5.0%
90 Day16.3%19.4%2.9%
1 Year24.2%16.3%31.8%30.8%-2.3%-5.6%
3 Year-25.2%-34.9%124.2%116.3%12.4%-1.2%
5 Year-54.5%-65.1%202.1%179.7%41.5%12.9%

Price Volatility Vs. Market

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


Simply Wall St News

Valuation

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

>50%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: RKN (A$0.82) is trading below our estimate of fair value (A$1.68)

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


Price To Earnings Ratio

PE vs Industry: RKN is good value based on its PE Ratio (11.4x) compared to the AU Software industry average (34.8x).

PE vs Market: RKN is good value based on its PE Ratio (11.4x) compared to the Australian market (21.4x).


Price to Earnings Growth Ratio

PEG Ratio: RKN is poor value based on its PEG Ratio (4.9x)


Price to Book Ratio

PB vs Industry: RKN is good value based on its PB Ratio (3.8x) compared to the AU Software industry average (5.8x).


Next Steps

Future Growth

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

2.3%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

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

Earnings vs Market: RKN's earnings (2.3% per year) are forecast to grow slower than the Australian market (17.5% per year).

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

Revenue vs Market: RKN's revenue (2.4% per year) is forecast to grow slower than the Australian market (4.6% per year).

High Growth Revenue: RKN's revenue (2.4% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: RKN's Return on Equity is forecast to be high in 3 years time (33.3%)


Next Steps

Past Performance

How has Reckon performed over the past 5 years?

-14.8%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: RKN has high quality earnings.

Growing Profit Margin: RKN's current net profit margins (10.8%) are higher than last year (10.5%).


Past Earnings Growth Analysis

Earnings Trend: RKN's earnings have declined by 14.8% per year over the past 5 years.

Accelerating Growth: RKN's earnings growth over the past year (5%) exceeds its 5-year average (-14.8% per year).

Earnings vs Industry: RKN earnings growth over the past year (5%) underperformed the Software industry 21%.


Return on Equity

High ROE: Whilst RKN's Return on Equity (33.52%) is high, this metric is skewed due to their high level of debt.


Next Steps

Financial Health

How is Reckon's financial position?


Financial Position Analysis

Short Term Liabilities: RKN's short term assets (A$12.5M) do not cover its short term liabilities (A$17.0M).

Long Term Liabilities: RKN's short term assets (A$12.5M) do not cover its long term liabilities (A$44.9M).


Debt to Equity History and Analysis

Debt Level: RKN's debt to equity ratio (138.7%) is considered high.

Reducing Debt: RKN's debt to equity ratio has increased from 123.3% to 138.7% over the past 5 years.

Debt Coverage: RKN's debt is well covered by operating cash flow (31.9%).

Interest Coverage: RKN's interest payments on its debt are well covered by EBIT (8.8x coverage).


Balance Sheet


Next Steps

Dividend

What is Reckon current dividend yield, its reliability and sustainability?

4.88%

Current Dividend Yield


Dividend Yield vs Market

Notable Dividend: RKN's dividend (4.88%) is higher than the bottom 25% of dividend payers in the Australian market (2.13%).

High Dividend: RKN's dividend (4.88%) is low compared to the top 25% of dividend payers in the Australian market (5.51%).


Stability and Growth of Payments

Stable Dividend: RKN's dividend payments have been volatile in the past 10 years.

Growing Dividend: RKN's dividend payments have fallen over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonable payout ratio (69.6%), RKN's dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: RKN's dividends in 3 years are forecast to be covered by earnings (71.4% payout ratio).


Next Steps

Management

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

16.0yrs

Average management tenure


CEO

Clive Rabie (60 yo)

2.25yrs

Tenure

AU$878,190

Compensation

Mr. Clive Alan Rabie is Group Managing Director of Reckon Ltd since July 1, 2018 and Executive Director of Reckon Ltd. since January 1, 2005. Mr. Rabie is Group Chief Executive Officer of Reckon Ltd. since ...


CEO Compensation Analysis

Compensation vs Market: Clive's total compensation ($USD622.30K) is above average for companies of similar size in the Australian market ($USD277.02K).

Compensation vs Earnings: Clive's compensation has been consistent with company performance over the past year.


Leadership Team

NamePositionTenureCompensationOwnership
Gregory Wilkinson
Founder & Independent Chairman2.25yrsAU$131.40k8.25%
A$ 7.7m
Clive Rabie
Group CEO2.25yrsAU$878.19k10.22%
A$ 9.5m
Samuel Allert
Group CEO & Executive Director2.25yrsAU$809.25k0.18%
A$ 164.2k
Christer Hagglund
Group Chief Financial Officer16yrsAU$721.90k0.41%
A$ 378.6k
Myron Zlotnick
Company Secretary17.92yrsno datano data
Paul James
General Manager of Professional Division Australia and General Manager of Aps Australiano dataAU$320.48kno data
Grant Linton
General Manager of Professional Division - New Zealandno dataAU$186.10kno data

16.0yrs

Average Tenure

59.5yo

Average Age

Experienced Management: RKN's management team is seasoned and experienced (16 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Gregory Wilkinson
Founder & Independent Chairman2.25yrsAU$131.40k8.25%
A$ 7.7m
Clive Rabie
Group CEO2.25yrsAU$878.19k10.22%
A$ 9.5m
Samuel Allert
Group CEO & Executive Director2.25yrsAU$809.25k0.18%
A$ 164.2k
Philip Hayman
Independent Non-executive Director2.25yrsAU$43.80k0.57%
A$ 533.7k

2.3yrs

Average Tenure

61yo

Average Age

Experienced Board: RKN's board of directors are not considered experienced ( 2.3 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.


Ownership Breakdown

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


Top Shareholders

Company Information

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


Key Information

  • Name: Reckon Limited
  • Ticker: RKN
  • Exchange: ASX
  • Founded: 1987
  • Industry: Application Software
  • Sector: Software
  • Market Cap: AU$92.902m
  • Shares outstanding: 113.29m
  • Website: https://www.reckon.com

Location

  • Reckon Limited
  • 100 Pacific Highway
  • Level 2
  • North Sydney
  • New South Wales
  • 2060
  • Australia

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
RKNASX (Australian Securities Exchange)YesOrdinary SharesAUAUDJul 1999
RKNCHIA (Chi-X Australia)YesOrdinary SharesAUAUDJul 1999
UVWDB (Deutsche Boerse AG)YesOrdinary SharesDEEURJul 1999

Biography

Reckon Limited provides software solutions in Australia, the United States, and internationally. It operates through Business Group; Practice Management Group, Accountants; and Practice Management Group, L ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/10/20 10:40
End of Day Share Price2020/10/20 00:00
Earnings2020/06/30
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.