LSE:AVST

Stock Analysis Report

Executive Summary

Avast Plc, together with its subsidiaries, provides digital security products under the Avast, AVG, and CCleaner brands worldwide.

Rewards

Earnings are forecast to grow 11.11% per year

Earnings grew by 8.8% over the past year

Risk Analysis

Has a high level of debt

Unstable dividend track record

Highly volatile share price over past 3 months

Shareholders have been diluted in the past year



Snowflake Analysis

Reasonable growth potential with acceptable track record.


Similar Companies

Sophos Group

LSE:SOPH

Share Price & News

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


Latest Share Price and Events

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


Market Performance


7 Day Return

4.3%

AVST

2.4%

GB Software

-0.5%

GB Market


1 Year Return

91.3%

AVST

29.1%

GB Software

12.4%

GB Market

Return vs Industry: AVST exceeded the UK Software industry which returned 24.8% over the past year.

Return vs Market: AVST exceeded the UK Market which returned 12.7% over the past year.


Shareholder returns

AVSTIndustryMarket
7 Day4.3%2.4%-0.5%
30 Day19.4%5.6%0.2%
90 Day34.2%17.4%6.0%
1 Year97.3%91.3%37.3%29.1%18.3%12.4%
3 Yearn/a19.3%0.8%22.6%6.9%
5 Yearn/a68.4%39.0%40.9%8.3%

Price Volatility Vs. Market

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


Simply Wall St News

Valuation

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

35.52x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: AVST (£5.1) is trading above our estimate of fair value (£4.2)

Significantly Below Fair Value: AVST is trading above our estimate of fair value.


Price To Earnings Ratio

PE vs Industry: AVST is poor value based on its PE Ratio (32.8x) compared to the Software industry average (31.6x).

PE vs Market: AVST is poor value based on its PE Ratio (32.8x) compared to the UK market (18.5x).


Price to Earnings Growth Ratio

PEG Ratio: AVST is poor value based on its PEG Ratio (2.9x)


Price to Book Ratio

PB vs Industry: AVST is overvalued based on its PB Ratio (6.6x) compared to the GB Software industry average (3.5x).


Next Steps

Future Growth

How is Avast forecast to perform in the next 1 to 3 years based on estimates from 10 analysts?

12.7%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: AVST's forecast earnings growth (11.1% per year) is above the savings rate (0.5%).

Earnings vs Market: AVST's earnings (12.7% per year) are forecast to grow faster than the UK market (11.8% per year).

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

Revenue vs Market: AVST's revenue (7.1% per year) is forecast to grow faster than the UK market (3.6% per year).

High Growth Revenue: AVST's revenue (7.1% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: AVST's Return on Equity is forecast to be high in 3 years time (24.6%)


Next Steps

Past Performance

How has Avast performed over the past 5 years?

43.4%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: AVST has high quality earnings.

Growing Profit Margin: AVST's current net profit margins (22.9%) are lower than last year (23.8%).


Past Earnings Growth Analysis

Earnings Trend: AVST's earnings have grown significantly by 43.4% per year over the past 5 years.

Accelerating Growth: AVST's earnings growth over the past year (8.8%) is below its 5-year average (43.4% per year).

Earnings vs Industry: AVST earnings growth over the past year (8.8%) exceeded the Software industry 7%.


Return on Equity

High ROE: Whilst AVST's Return on Equity (20.03%) is high, this metric is skewed due to their high level of debt.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Avast's financial position?


Financial Position Analysis

Short Term Liabilities: AVST's short term assets ($279.8M) do not cover its short term liabilities ($554.1M).

Long Term Liabilities: AVST's short term assets ($279.8M) do not cover its long term liabilities ($1.3B).


Debt to Equity History and Analysis

Debt Level: AVST's debt to equity ratio (120.8%) is considered high.

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

Debt Coverage: AVST's debt is well covered by operating cash flow (33.1%).

Interest Coverage: AVST's interest payments on its debt are well covered by EBIT (4.3x coverage).


Balance Sheet

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

Debt Coverage by Assets: AVST's debt is not covered by short term assets (assets are 0.2x debt).


Next Steps

Dividend

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

1.89%

Current Dividend Yield


Dividend Yield vs Market

company1.9%marketbottom25%1.8%markettop25%5.0%industryaverage2.4%forecastin3Years2.3%

Current dividend yield vs market & industry

Notable Dividend: AVST's dividend (2.05%) is higher than the bottom 25% of dividend payers in the UK market (1.83%).

High Dividend: AVST's dividend (2.05%) is low compared to the top 25% of dividend payers in the UK market (4.95%).


Stability and Growth of Payments

Stable Dividend: Too early to tell whether AVST's dividend payments have been stable as they only just started paying a dividend.

Growing Dividend: Too early to tell if AVST's dividend payments are increasing as they only just started paying a dividend.


Current Payout to Shareholders

Dividend Coverage: With its reasonable payout ratio (64.2%), AVST's dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: AVST's dividends in 3 years are forecast to be well covered by earnings (45.8% payout ratio).


Next Steps

Management

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

0.6yrs

Average management tenure


CEO

Ondrej Vlcek (42yo)

0.6yrs

Tenure

US$2,873,451

Compensation

Mr. Ondrej Vlcek has been the Chief Operations Officer at Avast Software B.V. since January 2014. Mr. Vlcek has been the Chief Executive Officer at Avast Plc since June 30, 2019 and served as its President ...


CEO Compensation Analysis

Compensation vs Market: Ondrej's total compensation ($USD2.87M) is about average for companies of similar size in the UK market ($USD3.42M).

Compensation vs Earnings: Insufficient data to compare Ondrej's compensation with company performance.


Management Age and Tenure

0.6yrs

Average Tenure

50.5yo

Average Age

Experienced Management: AVST's management team is not considered experienced ( 0.6 years average tenure), which suggests a new team.


Board Age and Tenure

1.6yrs

Average Tenure

59.5yo

Average Age

Experienced Board: AVST's board of directors are not considered experienced ( 1.6 years average tenure), which suggests a new board.


Insider Trading

Insider Buying: AVST insiders have only sold shares in the past 3 months.


Recent Insider Transactions

SellUK£2,172,05006 Dec 19
Ulf Claesson
EntityIndividual
Role
Member of the Board of Directors
Independent Non-Executive Director
Shares500,000
Max PriceUK£4.34
SellUK£792,35731 Oct 19
Ulf Claesson
EntityIndividual
Role
Member of the Board of Directors
Independent Non-Executive Director
Shares190,000
Max PriceUK£4.17
SellUK£3,990,00022 Oct 19
Erwin Gunst
EntityIndividual
Role
Member of the Board of Directors
Independent Non-Executive Director
Shares1,000,000
Max PriceUK£3.99
SellUK£360,43007 Oct 19
Ulf Claesson
EntityIndividual
Role
Member of the Board of Directors
Independent Non-Executive Director
Shares95,000
Max PriceUK£3.79
SellUK£3,579,20223 Aug 19
Erwin Gunst
EntityIndividual
Role
Member of the Board of Directors
Independent Non-Executive Director
Shares974,728
Max PriceUK£3.67

Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 11.7%.


Management Team

  • Vince Steckler (61yo)

    • Tenure: 0.6yrs
    • Compensation: US$6.95m
  • Ondrej Vlcek (42yo)

    Chief Executive Officer

    • Tenure: 0.6yrs
    • Compensation: US$2.87m
  • Michal Pechoucek

    Chief Technology Officer

    • Tenure: 0.3yrs
  • Phil Marshall (49yo)

    CFO & Director

    • Tenure: 1.9yrs
    • Compensation: US$859.47k
  • Detlef Steinmetz (52yo)

    Chief Information Officer

    • Peter Russell

      Director of Investor Relations

      • Stephanie Kane

        Vice President of PR & Corporate Communications

        • Pavel Baudis

          Co Founder & Director

          • Compensation: US$90.96k
        • Eduard Kucera

          Co Founder & Non-Executive Director

          • Compensation: US$86.99k
        • Kelby Barton

          General Counsel

          • Tenure: 2yrs

        Board Members

        • John Schwarz (68yo)

          Independent Chairman of the Board

          • Compensation: US$240.81k
        • Warren Finegold (62yo)

          Senior Independent Non-Executive Director

          • Compensation: US$88.71k
        • Ulf Claesson

          Independent Non-Executive Director

          • Compensation: US$79.03k
        • Ernie Gunst (59yo)

          Independent Non-Executive Director

          • Compensation: US$79.03k
        • Belinda Richards (60yo)

          Independent Non-Executive Director

          • Tenure: 1.6yrs
          • Compensation: US$64.87k
        • Ondrej Vlcek (42yo)

          Chief Executive Officer

          • Tenure: 0.6yrs
          • Compensation: US$2.87m
        • Phil Marshall (49yo)

          CFO & Director

          • Tenure: 1.9yrs
          • Compensation: US$859.47k
        • Maggie Chan Jones

          Independent Non-Executive Director

          • Tenure: 0.8yrs
        • Pavel Baudis

          Co Founder & Director

          • Compensation: US$90.96k
        • Eduard Kucera

          Co Founder & Non-Executive Director

          • Compensation: US$86.99k

        Company Information

        Avast Plc's company bio, employee growth, exchange listings and data sources


        Key Information

        • Name: Avast Plc
        • Ticker: AVST
        • Exchange: LSE
        • Founded: 1988
        • Industry: Systems Software
        • Sector: Software
        • Market Cap: UK£5.514b
        • Shares outstanding: 1.01b
        • Website: https://www.avast.com

        Number of Employees


        Location

        • Avast Plc
        • Pikrtova 1737/1A
        • Prague 4
        • Prague
        • 140 00
        • Czech Republic

        Listings

        TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
        AV2DB (Deutsche Boerse AG)YesOrdinary SharesDEEURMay 2018
        AVSTLSE (London Stock Exchange)YesOrdinary SharesGBGBPMay 2018
        AVSTSEP (The Stock Exchange Prague Co. Ltd.)YesOrdinary SharesCZCZKMay 2018
        AVSTLBATS-CHIXE (BATS 'Chi-X Europe')YesOrdinary SharesGBGBPMay 2018
        AVAS.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDMay 2018
        AVSTKBATS-CHIXE (BATS 'Chi-X Europe')YesOrdinary SharesGBCZKMay 2018

        Biography

        Avast Plc, together with its subsidiaries, provides digital security products under the Avast, AVG, and CCleaner brands worldwide. It operates through two segments, Consumer and Small and Medium Business (SMB). The company offers desktop security and mobile device protection products; value-added solutions for performance, privacy, and other tools; dynamic secure search solution, including browser toolbar; and big data and marketing analytics solutions, as well as security solutions designed for small businesses. It also provides managed security platforms comprises management console, a cloud-based console that allows a user to deploy antivirus protection to multiple devices and manage all devices from one place; CloudCare, a SaaS security platform that remotely delivers layered endpoint and network security services to multiple devices and sites; and Managed Workplace RMM products. In addition, the company offers business security services, such as managed antivirus, secure Web gateway, backup and disaster recovery, email security, content filtering, and NOC and help desk services. Further, it owns and operates FileHippo, a download Website that offers computer software. The company primarily sells software licenses through e-commerce services providers, and retailers and resellers. Avast Plc was founded in 1988 and is headquartered in Prague, the Czech Republic. 


        Company Analysis and Financial Data Status

        All financial data provided by Standard & Poor's Capital IQ.
        DataLast Updated (UTC time)
        Company Analysis2020/01/22 23:00
        End of Day Share Price2020/01/22 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.