ASX:RKN

Stock Analysis Report

Executive Summary

Reckon Limited provides software solutions for small and medium businesses, larger businesses, accountants, bookkeepers, and lawyers in Australia, the United States, and others.

Snowflake

Fundamentals

Fair value with acceptable track record.

Risks

  • Reckon has significant price volatility in the past 3 months.
  • Reckon is covered by less than 3 analysts.

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


Market Performance


7 Day Return

18.6%

ASX:RKN

2.1%

AU Software

-1.7%

AU Market


1 Year Return

-16.8%

ASX:RKN

23.3%

AU Software

1.5%

AU Market

RKN underperformed the Software industry which returned 23.3% over the past year.

RKN underperformed the Market in Australia which returned 1.5% over the past year.


Share holder returns

RKNIndustryMarket
7 Day18.6%2.1%-1.7%
30 Day2.7%-0.1%-3.2%
90 Day21.4%7.1%-0.1%
1 Year-16.8%-16.8%24.4%23.3%7.3%1.5%
3 Year-50.9%-56.8%108.4%98.8%30.7%13.8%
5 Year-55.4%-63.6%144.7%126.5%37.6%7.0%

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 based on future cash flows and its price relative to the stock market?

34%

Discount to future cash flow value


Intrinsic Value Based on Future Cash Flows

Reckon's share price is below the future cash flow value, and at a moderate discount (> 20%).

Reckon's share price is below the future cash flow value, but not at a substantial discount (< 40%).


Price Based on Earnings

Reckon is good value based on earnings compared to the AU Software industry average.

Reckon is good value based on earnings compared to the Australia market.


Price Based on Expected Growth

Reckon is poor value based on expected growth next year.


Price Based on Value of Assets

Reckon is overvalued based on assets compared to the AU Software industry average.


Next Steps

Future Growth

How is Reckon expected to perform in the next 1 to 3 years based on estimates from 2 analysts?

4.5%

Forecasted annual earnings growth


Earnings and Revenue Growth Estimates


Future Annual Growth Analysis

Reckon's revenue is expected to grow by 1.4% yearly, however this is not considered high growth (20% yearly).

Reckon's earnings are expected to grow by 4.5% yearly, however this is not considered high growth (20% yearly).

Reckon's revenue growth is positive but not above the Australia market average.

Reckon's earnings growth is positive but not above the Australia market average.

Reckon's earnings growth is expected to exceed the low risk savings rate of 2.3%.


Earnings per Share Growth Estimates


Future Return on Equity

Reckon is expected to efficiently use shareholders’ funds in the future (Return on Equity greater than 20%).


Next Steps

Past Performance

How has Reckon performed over the past 5 years?

-23.0%

Historical annual earnings growth


Earnings and Revenue History


Past Earnings Growth Analysis

Reckon's year on year earnings growth rate was negative over the past 5 years and the most recent earnings are below average.

Reckon's 1-year earnings growth exceeds its 5-year average (9.1% vs -23%)

Reckon's earnings growth has exceeded the AU Software industry average in the past year (9.1% vs 8.5%).


Return on Equity

Whilst Reckon has efficiently used shareholders’ funds last year (Return on Equity greater than 20%), this is metric is skewed due to its high level of debt.


Return on Assets

Reckon used its assets more efficiently than the AU Software industry average last year based on Return on Assets.


Return on Capital Employed

Reckon's use of capital deteriorated last year versus 3 years ago (Return on Capital Employed).


Next Steps

Financial Health

How is Reckon's financial position?


Financial Position Analysis

Reckon's short term (1 year) commitments are greater than its holdings of cash and other short term assets.

Reckon's long term commitments exceed its cash and other short term assets.


Debt to Equity History and Analysis

Reckon's level of debt (176%) compared to net worth is high (greater than 40%).

The level of debt compared to net worth has increased over the past 5 years (30% vs 176% today).

Debt is well covered by operating cash flow (27.3%, greater than 20% of total debt).

Interest payments on debt are well covered by earnings (EBIT is 7.3x coverage).


Balance Sheet

Low level of unsold assets.

Debt is not covered by short term assets, assets are 0.4x debt.


Next Steps

Dividend

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

5.99%

Expected Dividend Yield


Upcoming Dividend Payment

Purchase Reckon before the 'Buy Limit' to receive their next dividend payment.


Dividend Yield and Payments Analysis

Reckon's pays a higher dividend yield than the bottom 25% of dividend payers in Australia (2.55%).

Reckon's dividend is above the markets top 25% of dividend payers in Australia (5.84%).

Dividends per share have been volatile in the past 10 years (annual drop of over 20%).

No dividend growth in 10 years.


Current Payout to Shareholders

Unable to calculate sustainability of dividends as Reckon has not reported any payouts.


Future Payout to Shareholders

Dividends after 3 years are expected to be covered by earnings (1.6x coverage).


Next Steps

Management

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

16.8yrs

Average management tenure


CEO

Sam Allert 0

0.0yrs

Tenure

AU$723,302

Compensation

Mr. Samuel Allert, also known as Sam, has been Group Chief Executive Officer and Executive Director at Reckon Limited since July 1, 2018. Mr. Allert served as Managing Director of Business and Accountant G ...


CEO Compensation Analysis

Sam's remuneration is higher than average for companies of similar size in Australia.

Sam's compensation has been consistent with company performance over the past year, both up more than 20%.


Management Age and Tenure

16.8yrs

Average Tenure

58.5yo

Average Age

The average tenure for the Reckon management team is over 5 years, this suggests they are a seasoned and experienced team.


Board Age and Tenure

1.1yrs

Average Tenure

60yo

Average Age

The average tenure for the Reckon board of directors is less than 3 years, this suggests a new board.


Insider Trading

No 3 month open market individual insider trading information.


Recent Insider Transactions

BuyAU$1,061,63310 Apr 19
Spheria Asset Management Pty Ltd
EntityCompany
Shares1,602,528
Max PriceAU$0.67
BuyAU$19,05427 Feb 19
Samuel Allert
EntityIndividual
Role
Chief Executive Officer
Group CEO & Executive Director
Shares28,500
Max PriceAU$0.68

Ownership Breakdown


Management Team

  • Myron Zlotnick (54yo)

    Company Secretary

    • Tenure: 16.8yrs
    • Compensation: AU$631.65k
  • Clive Rabie (59yo)

    Group MD & Executive Director

    • Tenure: 14.6yrs
    • Compensation: AU$1.95m
  • Greg Wilkinson (63yo)

    Founder & Chairman

    • Tenure: 1.1yrs
    • Compensation: AU$125.79k
  • Chris Hagglund (58yo)

    Group Chief Financial Officer

    • Tenure: 14.8yrs
    • Compensation: AU$759.60k
  • Paul James

    General Manager of Professional Division Australia and General Manager of Aps Australia

    • Tenure: 0.0yrs
    • Compensation: AU$320.48k
  • Grant Linton

    General Manager of Professional Division - New Zealand

    • Tenure: 0.0yrs
    • Compensation: AU$186.10k
  • Sam Allert

    Group CEO & Executive Director

    • Tenure: 0.0yrs
    • Compensation: AU$723.30k

Board Members

  • Clive Rabie (59yo)

    Group MD & Executive Director

    • Tenure: 14.6yrs
    • Compensation: AU$1.95m
  • Greg Wilkinson (63yo)

    Founder & Chairman

    • Tenure: 1.1yrs
    • Compensation: AU$125.79k
  • Phil Hayman (60yo)

    Independent Non-executive Director

    • Tenure: 1.1yrs
    • Compensation: AU$43.80k
  • Sam Allert

    Group CEO & Executive Director

    • Tenure: 0.0yrs
    • Compensation: AU$723.30k

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$90.349m
  • Shares outstanding: 112.94m
  • 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 for small and medium businesses, larger businesses, accountants, bookkeepers, and lawyers in Australia, the United States, and others. It operates through Busines ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/08/22 10:33
End of Day Share Price2019/08/22 00:00
Earnings2019/06/30
Annual Earnings2018/12/31


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.