ASX:RKN

Stock Analysis Report

Executive Summary

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

Snowflake

Fundamentals

Good value second-rate dividend payer.


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

-4.7%

RKN

-5.5%

AU Software

-0.2%

AU Market


1 Year Return

-3.4%

RKN

41.7%

AU Software

10.5%

AU Market

Return vs Industry: RKN underperformed the Australian Software industry which returned 41.7% over the past year.

Return vs Market: RKN underperformed the Australian Market which returned 10.5% over the past year.


Shareholder returns

RKNIndustryMarket
7 Day-4.7%-5.5%-0.2%
30 Day-1.4%-6.4%-1.4%
90 Day-2.1%-3.4%-1.0%
1 Year0.7%-3.4%42.9%41.7%16.9%10.5%
3 Year-47.8%-55.9%130.1%121.0%36.9%18.6%
5 Year-53.8%-63.8%168.6%146.9%50.2%16.2%

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?

38.2%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: RKN (A$0.71) is trading below our estimate of fair value (A$1.14)

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


Price To Earnings Ratio

PE vs Industry: RKN is good value based on its PE Ratio (10.2x) compared to the Software industry average (34.5x).

PE vs Market: RKN is good value based on its PE Ratio (10.2x) compared to the Australian market (18.4x).


Price to Earnings Growth Ratio

PEG Ratio: RKN is poor value based on its PEG Ratio (7.4x)


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 (4.4x).


Next Steps

Future Growth

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

1.4%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: RKN's forecast earnings growth (1.4% per year) is below the savings rate (2.3%).

Earnings vs Market: RKN's earnings (1.4% per year) are forecast to grow slower than the Australian market (10.2% per year).

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

Revenue vs Market: RKN's revenue (1.2% per year) is forecast to grow slower than the Australian market (3.6% per year).

High Growth Revenue: RKN's revenue (1.2% 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 (36.6%)


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

Earnings Trend: RKN's earnings have declined by -23% per year over the past 5 years.

Accelerating Growth: RKN's earnings growth over the past year (9.1%) exceeds its 5-year average (-23% per year).

Earnings vs Industry: RKN earnings growth over the past year (9.1%) underperformed the Software industry 22.6%.


Return on Equity

High ROE: Whilst RKN's Return on Equity (37.15%) is high, this metric is skewed due to their high level of debt.


Return on Assets

ROA vs Industry: RKN has a higher Return on Assets than the Software industry average last year.


Return on Capital Employed

ROCE Improving: RKN's Return on Capital Employed has declined over the past 3 years.


Next Steps

Financial Health

How is Reckon's financial position?


Financial Position Analysis

Short Term Liabilities: RKN's short term assets (A$14.9M) do not cover its short term liabilities (A$16.5M)

Long Term Liabilities: RKN's short term assets (14.9M) do not cover its long term liabilities (50.5M)


Debt to Equity History and Analysis

Debt Level: RKN's debt to equity ratio (176%) is considered high

Reducing Debt: RKN's debt to equity ratio has increased from 30% to 176% over the past 5 years.

Debt Coverage: RKN's debt is well covered by operating cash flow (27.3%).

Interest Coverage: RKN's interest payments on its debt are well covered by EBIT (7.3x coverage).


Balance Sheet

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

Debt Coverage by Assets: RKN's 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?

8.51%

Current Dividend Yield


Dividend Yield vs Market

company8.5%marketbottom25%2.4%markettop25%5.6%industryaverage1.2%forecastin3Years6.5%

Current dividend yield vs market & industry


Stability and Growth of Payments

Notable Dividend: RKN's dividend (8.51%) is higher than the bottom 25% of dividend payers in the Australian market (2.44%).

High Dividend: RKN's dividend (8.51%) is in the top 25% of dividend payers in the Australian market (5.61%)

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

Growing Dividend: RKN's dividend payments have not increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: Unable to calculate sustainability of dividends as RKN has not reported any payouts.


Future Payout to Shareholders

Future Dividend Coverage: RKN's dividends in 3 years are forecast to be covered by earnings (66.7% payout ratio).


Next Steps

Management

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

17.0yrs

Average management tenure


CEO

Sam Allert 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

Compensation vs. Market: Sam's total compensation ($USD496.36K) is above average for companies of similar size in the Australian market ($USD259.85K).

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


Management Age and Tenure

17.0yrs

Average Tenure

58.5yo

Average Age

Experienced Management: RKN's management team is seasoned and experienced (17 years average tenure).


Board Age and Tenure

1.3yrs

Average Tenure

60yo

Average Age

Experienced Board: RKN's board of directors are not considered experienced ( 1.3 years average tenure), which suggests a new board.


Insider Trading

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


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: 17yrs
    • Compensation: AU$631.65k
  • Clive Rabie (59yo)

    Group MD & Executive Director

    • Tenure: 14.8yrs
    • Compensation: AU$1.95m
  • Greg Wilkinson (63yo)

    Founder & Chairman

    • Tenure: 1.3yrs
    • Compensation: AU$125.79k
  • Chris Hagglund (58yo)

    Group Chief Financial Officer

    • Tenure: 15yrs
    • Compensation: AU$759.60k
  • Paul James

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

    • Tenure: 0yrs
    • Compensation: AU$320.48k
  • Grant Linton

    General Manager of Professional Division - New Zealand

    • Tenure: 0yrs
    • Compensation: AU$186.10k
  • Sam Allert

    Group CEO & Executive Director

    • Tenure: 0yrs
    • Compensation: AU$723.30k

Board Members

  • Clive Rabie (59yo)

    Group MD & Executive Director

    • Tenure: 14.8yrs
    • Compensation: AU$1.95m
  • Greg Wilkinson (63yo)

    Founder & Chairman

    • Tenure: 1.3yrs
    • Compensation: AU$125.79k
  • Phil Hayman (60yo)

    Independent Non-executive Director

    • Tenure: 1.3yrs
    • Compensation: AU$43.80k
  • Sam Allert

    Group CEO & Executive Director

    • Tenure: 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$83.573m
  • 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 to larger businesses, accountants, bookkeepers, and lawyers in Australia, the United States, and others. It operates through Business Group, Accountant  ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/10/22 10:32
End of Day Share Price2019/10/22 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.