TSX:ENGH

Stock Analysis Report

Enghouse Systems

Executive Summary

Enghouse Systems Limited develops enterprise software solutions worldwide.

Rewards

Trading at 6.1% below its fair value

Earnings are forecast to grow 14.01% per year

Earnings have grown 18.6% per year over the past 5 years

Risk Analysis

Highly volatile share price over past 3 months

Significant insider selling over the past 3 months



Snowflake Analysis

Excellent balance sheet with proven track record.


Similar Companies

International Business Machines

NYSE:IBM

Share Price & News

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


Latest Share Price and Events

Stable Share Price: ENGH's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

-0.1%

ENGH

2.9%

CA Software

0.4%

CA Market


1 Year Return

42.8%

ENGH

33.3%

CA Software

10.1%

CA Market

Return vs Industry: ENGH exceeded the Canadian Software industry which returned 35.9% over the past year.

Return vs Market: ENGH exceeded the Canadian Market which returned 10.4% over the past year.


Shareholder returns

ENGHIndustryMarket
7 Day-0.1%2.9%0.4%
30 Day6.4%9.8%2.1%
90 Day40.9%15.5%6.4%
1 Year44.5%42.8%35.6%33.3%13.6%10.1%
3 Year107.1%100.3%90.3%85.7%17.2%6.6%
5 Year169.5%155.8%152.3%144.6%37.5%17.3%

Price Volatility Vs. Market

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


Simply Wall St News

Valuation

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

5.2%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: ENGH (CA$51.73) is trading below our estimate of fair value (CA$55.11)

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


Price To Earnings Ratio

PE vs Industry: ENGH is poor value based on its PE Ratio (39.9x) compared to the Software industry average (22.7x).

PE vs Market: ENGH is poor value based on its PE Ratio (39.9x) compared to the Canadian market (15.8x).


Price to Earnings Growth Ratio

PEG Ratio: ENGH is poor value based on its PEG Ratio (2.8x)


Price to Book Ratio

PB vs Industry: ENGH is overvalued based on its PB Ratio (7x) compared to the CA Software industry average (2.8x).


Next Steps

Future Growth

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

14.0%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: ENGH's forecast earnings growth (14% per year) is above the savings rate (1.4%).

Earnings vs Market: ENGH's earnings (14% per year) are forecast to grow faster than the Canadian market (10.3% per year).

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

Revenue vs Market: ENGH's revenue (19.2% per year) is forecast to grow faster than the Canadian market (5% per year).

High Growth Revenue: ENGH's revenue (19.2% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: Insufficient data to determine if ENGH's Return on Equity is forecast to be high in 3 years time


Next Steps

Past Performance

How has Enghouse Systems performed over the past 5 years?

18.6%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: ENGH has high quality earnings.

Growing Profit Margin: ENGH's current net profit margins (18.4%) are higher than last year (16.8%).


Past Earnings Growth Analysis

Earnings Trend: ENGH's earnings have grown by 18.6% per year over the past 5 years.

Accelerating Growth: ENGH's earnings growth over the past year (22.7%) exceeds its 5-year average (18.6% per year).

Earnings vs Industry: ENGH earnings growth over the past year (22.7%) underperformed the Software industry 23.2%.


Return on Equity

High ROE: ENGH's Return on Equity (17.6%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Enghouse Systems's financial position?


Financial Position Analysis

Short Term Liabilities: ENGH's short term assets (CA$246.4M) exceed its short term liabilities (CA$161.0M).

Long Term Liabilities: ENGH's short term assets (CA$246.4M) exceed its long term liabilities (CA$27.6M).


Debt to Equity History and Analysis

Debt Level: ENGH's debt to equity ratio (0.3%) is considered satisfactory.

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

Debt Coverage: ENGH's debt is well covered by operating cash flow (7246.2%).

Interest Coverage: ENGH earns more interest than it pays, so coverage of interest payments is not a concern.


Balance Sheet

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

Debt Coverage by Assets: ENGH's debt is covered by short term assets (assets are 219.4x debt).


Next Steps

Dividend

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

0.84%

Current Dividend Yield


Upcoming Dividend Payment

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


Dividend Yield vs Market

company0.8%marketbottom25%1.9%markettop25%5.5%industryaverage1.2%forecastin3Years0.8%

Current dividend yield vs market & industry

Notable Dividend: ENGH's dividend (0.85%) isn’t notable compared to the bottom 25% of dividend payers in the Canadian market (1.88%).

High Dividend: ENGH's dividend (0.85%) is low compared to the top 25% of dividend payers in the Canadian market (5.48%).


Stability and Growth of Payments

Stable Dividend: ENGH is not paying a notable dividend for the Canadian market, therefore no need to check if payments are stable.

Growing Dividend: ENGH is not paying a notable dividend for the Canadian market, therefore no need to check if payments are increasing.


Current Payout to Shareholders

Dividend Coverage: ENGH is not paying a notable dividend for the Canadian market.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of ENGH's dividend in 3 years as they are not forecast to pay a notable one for the Canadian market.


Next Steps

Management

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

2.8yrs

Average management tenure


CEO

Stephen Sadler (68yo)

19.8yrs

Tenure

CA$4,606,163

Compensation

Mr. Stephen J. Sadler, also known as Steve, has been the Chief Executive Officer and the Chairman of the Board of Enghouse Systems Limited since April 1, 2000. Mr. Sadler has been a Director of CTI Group H ...


CEO Compensation Analysis

Compensation vs Market: Stephen's total compensation ($USD3.53M) is above average for companies of similar size in the Canadian market ($USD2.17M).

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


Management Age and Tenure

2.8yrs

Average Tenure

61yo

Average Age

Experienced Management: ENGH's management team is considered experienced (2.8 years average tenure).


Board Age and Tenure

15.8yrs

Average Tenure

64yo

Average Age

Experienced Board: ENGH's board of directors are seasoned and experienced ( 15.8 years average tenure).


Insider Trading

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


Recent Insider Transactions

SellCA$366,10021 Jan 20
Paul Stoyan
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares7,000
Max PriceCA$52.30
SellCA$214,85920 Jan 20
Stephen Sadler
EntityIndividual
Role
Chief Executive Officer
Chairman & CEO
Shares4,100
Max PriceCA$52.47
BuyCA$190,70017 Jan 20
Pierre Lassonde
EntityIndividual
Role
Lead Director
Lead Director
Shares20,000
Max PriceCA$9.54
SellCA$1,035,08017 Jan 20
Pierre Lassonde
EntityIndividual
Role
Lead Director
Lead Director
Shares20,000
Max PriceCA$51.75
SellCA$650,00015 Jan 20
Paul Stoyan
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares12,500
Max PriceCA$52.00
SellCA$3,891,44211 Jan 20
Stephen Sadler
EntityIndividual
Role
Chief Executive Officer
Chairman & CEO
Shares75,900
Max PriceCA$52.46
SellCA$1,028,23810 Jan 20
Paul Stoyan
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares20,000
Max PriceCA$52.11
SellCA$307,45210 Jan 20
Eric Demirian
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares6,000
Max PriceCA$51.24
SellCA$5,020,96024 Dec 19
Lassonde Family Foundation, Endowment Arm
EntityCompany
Shares100,000
Max PriceCA$50.21
BuyCA$119,99016 Dec 19
Jane Mowat
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares2,600
Max PriceCA$46.70
BuyCA$103,12513 Mar 19
Forfar Trust
EntityCompany
Shares3,000
Max PriceCA$34.37

Ownership Breakdown

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


Management Team

  • Stephen Sadler (68yo)

    Chairman & CEO

    • Tenure: 19.8yrs
    • Compensation: CA$4.61m
  • Vince Mifsud (51yo)

    President

    • Tenure: 2yrs
    • Compensation: CA$1.93m
  • Douglas Bryson

    VP of Finance & Administration and Corporate Secretary

    • Compensation: CA$285.46k
  • Michael Stubbing (61yo)

    Managing Director of West & Northern Europe

    • Compensation: CA$323.36k
  • Ernie Wallerstein

    President of Americas Interactive Management Division

    • Compensation: CA$574.35k
  • Sam Anidjar

    Vice President of Corporate Development

    • Todd May

      VP & General Counsel

      • Compensation: CA$263.55k
    • Christoph Mosing

      President of Global Cloud Interactive Management Division (USA)

      • Compensation: CA$293.83k
    • Lynette Corbett

      Chief Administration & Human Resources Officer

      • Tenure: 2.8yrs
    • Sunil Diaz

      General Manager of Networks Division

      • Compensation: CA$291.82k

    Board Members

    • Eric Demirian (60yo)

      Independent Director

      • Tenure: 15.8yrs
      • Compensation: CA$140.00k
    • Stephen Sadler (68yo)

      Chairman & CEO

      • Tenure: 19.8yrs
      • Compensation: CA$4.61m
    • Pierre Lassonde (71yo)

      Lead Director

      • Compensation: CA$130.00k
    • Reid Drury

      Independent Director

      • Tenure: 19.8yrs
      • Compensation: CA$125.00k
    • Paul Stoyan (60yo)

      Independent Director

      • Tenure: 13.4yrs
      • Compensation: CA$125.00k
    • Jane Mowat

      Independent Director

      • Tenure: 0.8yrs
    • John Gibson

      Independent Director

      • Tenure: 15.8yrs
      • Compensation: CA$125.00k

    Company Information

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


    Key Information

    • Name: Enghouse Systems Limited
    • Ticker: ENGH
    • Exchange: TSX
    • Founded: 1984
    • Industry: Application Software
    • Sector: Software
    • Market Cap: CA$2.863b
    • Shares outstanding: 54.79m
    • Website: https://www.enghouse.com

    Number of Employees


    Location

    • Enghouse Systems Limited
    • 80 Tiverton Court
    • Suite 800
    • Markham
    • Ontario
    • L3R 0G4
    • Canada

    Listings

    TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
    ENGHTSX (The Toronto Stock Exchange)YesCommon SharesCACADFeb 1998
    EGHS.FOTCPK (Pink Sheets LLC)YesCommon SharesUSUSDFeb 1998
    30000DB (Deutsche Boerse AG)YesCommon SharesDEEURFeb 1998

    Biography

    Enghouse Systems Limited develops enterprise software solutions worldwide. It operates through two segments, Interactive Management Group and Asset Management Group. The Interactive Management Group segment provides customer interaction software and services. Its technologies include contact center, attendant console, interactive voice response, dialers, video collaboration, agent performance optimization, and analytics that support various telephony environment. This segment serves insurance companies, telecoms, banks, as well as technology, health care, and hospitality companies using deployment models, such as cloud, on-premise, hosted, and hybrid. The Asset Management Group segment offers a portfolio of products to telecom service providers. Its products include operations support systems, business support systems, and mobile value added services solutions, video and IPTV services as well as data conversion services. This segment also provides fleet routing, dispatch, scheduling, transit e-ticketing and automated fare collection, communications, and emergency control center solutions for the transportation, government, first responders, distribution, and security sectors. Further, it offers public transport agencies and operators with e-ticketing solutions; and integrated software platform for wholesale billing and partner settlements; client, server and cloud software products as well as system integration services; and also offers customer engagement software. The company was founded in 1984 and is headquartered in Markham, Canada. 


    Company Analysis and Financial Data Status

    All financial data provided by Standard & Poor's Capital IQ.
    DataLast Updated (UTC time)
    Company Analysis2020/01/23 23:37
    End of Day Share Price2020/01/23 00:00
    Earnings2019/10/31
    Annual Earnings2019/10/31


    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.