NZSE:SKO

Stock Analysis Report

Executive Summary

Serko Limited, together with its subsidiaries, provides computer software solutions for expenses management and online travel bookings in New Zealand, Australia, North America, and internationally.

Rewards

Trading at 39.4% below its fair value

Earnings are forecast to grow 116.97% per year

Risk Analysis

Highly volatile share price over past 3 months

Shareholders have been diluted in the past year



Snowflake Analysis

High growth potential with adequate balance sheet.

Share Price & News

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


Latest Share Price and Events

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


Market Performance


7 Day Return

8.4%

SKO

-4.7%

NZ Software

1.9%

NZ Market


1 Year Return

74.8%

SKO

-4.2%

NZ Software

23.4%

NZ Market

Return vs Industry: SKO exceeded the NZ Software industry which returned 4% over the past year.

Return vs Market: SKO exceeded the NZ Market which returned 22.5% over the past year.


Shareholder returns

SKOIndustryMarket
7 Day8.4%-4.7%1.9%
30 Day10.2%-3.4%4.3%
90 Day39.5%-9.6%5.4%
1 Year74.8%74.8%-3.2%-4.2%28.5%23.4%
3 Year1536.4%1536.4%76.0%67.3%62.2%40.9%
5 Year390.9%390.9%95.7%83.3%98.9%54.4%

Price Volatility Vs. Market

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


Simply Wall St News

Valuation

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

35.6%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: SKO (NZ$5.08) is trading below our estimate of fair value (NZ$8.39)

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


Price To Earnings Ratio

PE vs Industry: SKO is unprofitable, so we can't compare its PE Ratio to the Software industry average.

PE vs Market: SKO is unprofitable, so we can't compare its PE Ratio to the NZ market.


Price to Earnings Growth Ratio

PEG Ratio: Insufficient data to calculate SKO's PEG Ratio to determine if it is good value.


Price to Book Ratio

PB vs Industry: SKO is overvalued based on its PB Ratio (16.1x) compared to the NZ Software industry average (3x).


Next Steps

Future Growth

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

117.0%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: SKO is forecast to become profitable over the next 3 years, which is considered faster growth than the savings rate (1.3%).

Earnings vs Market: SKO is forecast to become profitable over the next 3 years, which is considered above average market growth.

High Growth Earnings: SKO's is expected to become profitable in the next 3 years.

Revenue vs Market: SKO's revenue (26.3% per year) is forecast to grow faster than the NZ market (4.8% per year).

High Growth Revenue: SKO's revenue (26.3% per year) is forecast to grow faster than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: SKO's Return on Equity is forecast to be low in 3 years time (8.1%).


Next Steps

Past Performance

How has Serko performed over the past 5 years?

56.8%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: SKO is currently unprofitable.

Growing Profit Margin: SKO is currently unprofitable.


Past Earnings Growth Analysis

Earnings Trend: SKO is unprofitable, but has reduced losses over the past 5 years at a rate of 56.8% per year.

Accelerating Growth: Unable to compare SKO's earnings growth over the past year to its 5-year average as it is currently unprofitable

Earnings vs Industry: SKO is unprofitable, making it difficult to compare its past year earnings growth to the Software industry (22%).


Return on Equity

High ROE: SKO has a negative Return on Equity (-0.6%), as it is currently unprofitable.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Serko's financial position?


Financial Position Analysis

Short Term Liabilities: SKO's short term assets (NZ$17.2M) exceed its short term liabilities (NZ$9.8M).

Long Term Liabilities: SKO's short term assets (NZ$17.2M) exceed its long term liabilities (NZ$1.6M).


Debt to Equity History and Analysis

Debt Level: SKO is debt free.

Reducing Debt: SKO currently has no debt however we can't compare to 5 years ago as we have no data for that period.


Balance Sheet

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

Debt Coverage by Assets: Insufficient data to determine if SKO's debt is covered by short term assets.


Cash Runway Analysis

For companies that have on average been loss making in the past we assess whether they have at least 1 year of cash runway.

Stable Cash Runway: Insufficient data to determine if SKO has enough cash runway based on its current free cash flow.

Forecast Cash Runway: Insufficient data to determine if SKO has enough cash runway if its free cash flow continues to grow or shrink based on historical rates.


Next Steps

Dividend

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


Dividend Yield vs Market

companyn/amarketbottom25%2.8%markettop25%5.2%industryaverage1.1%forecastin3Yearsn/a

Current dividend yield vs market & industry

Notable Dividend: Unable to evaluate SKO's dividend yield against the bottom 25% of dividend payers, as the company has not reported any payouts.

High Dividend: Unable to evaluate SKO's dividend yield against the top 25% of dividend payers, as the company has not reported any payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if SKO's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if SKO's dividend payments have been increasing.


Current Payout to Shareholders

Dividend Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.


Future Payout to Shareholders

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


Next Steps

Management

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

2.9yrs

Average management tenure


CEO

Darrin Grafton 0

0yrs

Tenure

NZ$630,734

Compensation

Mr. Darrin John Grafton, N.Z.C.D.P. is a Co-Founder of SERKO Limited and serves as its Chief Executive Officer. Mr. Grafton served as Development Manager at Serko Limited. He has 25 years of experience in  ...


CEO Compensation Analysis

Compensation vs Market: Darrin's total compensation ($USD416.99K) is below average for companies of similar size in the NZ market ($USD656.33K).

Compensation vs Earnings: Darrin's compensation has increased whilst the company is unprofitable.


Management Age and Tenure

2.9yrs

Average Tenure

Experienced Management: SKO's management team is considered experienced (2.9 years average tenure).


Board Age and Tenure

9.3yrs

Average Tenure

Experienced Board: SKO's board of directors are considered experienced (9.3 years average tenure).


Insider Trading

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


Recent Insider Transactions

BuyNZ$3,99509 Jan 20
Claudia Batten
EntityIndividual
Role
Member of the Board of Directors
Independent Non-Executive Director
Shares799.22
Max PriceNZ$5.00
BuyNZ$3,99309 Jan 20
Simon Botherway
EntityIndividual
Role
Chairman of the Board
Independent Non-Executive Chairman
Shares798.78
Max PriceNZ$5.00
BuyNZ$3,99605 Dec 19
Claudia Batten
EntityIndividual
Role
Member of the Board of Directors
Independent Non-Executive Director
Shares801.34
Max PriceNZ$5.00
BuyNZ$3,99805 Dec 19
Simon Botherway
EntityIndividual
Role
Chairman of the Board
Independent Non-Executive Chairman
Shares801.74
Max PriceNZ$5.00
BuyNZ$4,28406 Nov 19
Claudia Batten
EntityIndividual
Role
Member of the Board of Directors
Independent Non-Executive Director
Shares821.05
Max PriceNZ$5.22
BuyNZ$3,96506 Nov 19
Simon Botherway
EntityIndividual
Role
Chairman of the Board
Independent Non-Executive Chairman
Shares821.01
Max PriceNZ$4.83
BuyNZ$4,01407 Oct 19
Simon Botherway
EntityIndividual
Role
Chairman of the Board
Independent Non-Executive Chairman
Shares1,001
Max PriceNZ$4.01
BuyNZ$4,01407 Oct 19
Claudia Batten
EntityIndividual
Role
Member of the Board of Directors
Independent Non-Executive Director
Shares1,001.03
Max PriceNZ$4.01
BuyNZ$32423 Sep 19
Claudia Batten
EntityIndividual
Role
Member of the Board of Directors
Independent Non-Executive Director
Shares77.06
Max PriceNZ$4.20
BuyNZ$32423 Sep 19
Simon Botherway
EntityIndividual
Role
Chairman of the Board
Independent Non-Executive Chairman
Shares77.06
Max PriceNZ$4.20
BuyNZ$3,91604 Sep 19
Simon Botherway
EntityIndividual
Role
Chairman of the Board
Independent Non-Executive Chairman
Shares862.62
Max PriceNZ$4.54
BuyNZ$3,91704 Sep 19
Claudia Batten
EntityIndividual
Role
Member of the Board of Directors
Independent Non-Executive Director
Shares862.67
Max PriceNZ$4.54
BuyNZ$4,16704 Jul 19
Claudia Batten
EntityIndividual
Role
Member of the Board of Directors
Independent Non-Executive Director
Shares909.44
Max PriceNZ$4.59
BuyNZ$4,16704 Jul 19
Simon Botherway
EntityIndividual
Role
Chairman of the Board
Independent Non-Executive Chairman
Shares909.37
Max PriceNZ$4.59
BuyNZ$3,99106 May 19
Claudia Batten
EntityIndividual
Role
Member of the Board of Directors
Independent Non-Executive Director
Shares1,108.61
Max PriceNZ$3.60
BuyNZ$3,99106 May 19
Simon Botherway
EntityIndividual
Role
Chairman of the Board
Independent Non-Executive Chairman
Shares1,108.55
Max PriceNZ$3.60
SellNZ$207,00708 Apr 19
Harbour Asset Management Limited
EntityCompany
Shares64,578
Max PriceNZ$3.21
SellNZ$1,425,35508 Apr 19
First NZ Capital Ltd., Asset Management Arm
EntityCompany
Shares464,467
Max PriceNZ$3.07
BuyNZ$1,921,50108 Apr 19
Harbour Asset Management Limited
EntityCompany
Shares675,651
Max PriceNZ$2.84
BuyNZ$1,684,92508 Apr 19
First NZ Capital Ltd., Asset Management Arm
EntityCompany
Shares552,770
Max PriceNZ$3.05
BuyNZ$4,04103 Apr 19
Simon Botherway
EntityIndividual
Role
Chairman of the Board
Independent Non-Executive Chairman
Shares1,283
Max PriceNZ$3.15
BuyNZ$4,04203 Apr 19
Claudia Batten
EntityIndividual
Role
Member of the Board of Directors
Independent Non-Executive Director
Shares1,283.1
Max PriceNZ$3.15
BuyNZ$4,03507 Mar 19
Simon Botherway
EntityIndividual
Role
Chairman of the Board
Independent Non-Executive Chairman
Shares1,201.03
Max PriceNZ$3.36
BuyNZ$4,01707 Feb 19
Claudia Batten
EntityIndividual
Role
Member of the Board of Directors
Independent Non-Executive Director
Shares1,246.5
Max PriceNZ$3.25
BuyNZ$4,01707 Feb 19
Simon Botherway
EntityIndividual
Role
Chairman of the Board
Independent Non-Executive Chairman
Shares1,246.39
Max PriceNZ$3.25

Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 11.5%.


Management Team

  • Darrin Grafton

    Co-Founder

    • Compensation: NZ$630.73k
  • Tony D'Astolfo

    Senior Vice President of NORAM

    • Tenure: 1.8yrs
  • Susan Putt

    Chief Financial Officer

    • Tenure: 3yrs
  • Bob Shaw

    Co-Founder

    • Tenure: 12.8yrs
    • Compensation: NZ$430.83k
  • Michael Thorburn

    Head of Partnerships

    • Charlie Nowaczek

      Chief Operating Officer

      • Tenure: 2.9yrs
    • John Challis

      Head of Business Development

      • Joanne Phipps

        Acting Head of Product

        • Tenure: 5.9yrs
      • Phil Ball

        Chief Information Security Officer

        • Tenure: 2yrs
      • Murray Warner

        Head of Australasian market


        Board Members

        • Claudia Batten

          Independent Non-Executive Director

          • Tenure: 5.8yrs
          • Compensation: NZ$83.44k
        • Darrin Grafton

          Co-Founder

          • Compensation: NZ$630.73k
        • Simon Botherway

          Independent Non-Executive Chairman

          • Compensation: NZ$107.83k
        • Clyde McConaghy (57yo)

          Independent Non-Executive Director

          • Tenure: 5.8yrs
          • Compensation: NZ$83.44k
        • Bob Shaw

          Co-Founder

          • Tenure: 12.8yrs
          • Compensation: NZ$430.83k

        Company Information

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


        Key Information

        • Name: Serko Limited
        • Ticker: SKO
        • Exchange: NZSE
        • Founded: 1994
        • Industry: Application Software
        • Sector: Software
        • Market Cap: NZ$497.267m
        • Shares outstanding: 92.09m
        • Website: https://www.serko.com

        Number of Employees


        Location

        • Serko Limited
        • Saatchi Building
        • Unit 14D
        • Auckland
        • 1010
        • New Zealand

        Listings

        TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
        SKONZSE (New Zealand Stock Exchange)YesOrdinary sharesNZNZDJun 2014
        SKOASX (Australian Securities Exchange)YesOrdinary sharesAUAUDJun 2014
        SKOCHIA (Chi-X Australia)YesOrdinary sharesAUAUDJun 2014
        SERK.FOTCPK (Pink Sheets LLC)YesOrdinary sharesUSUSDJun 2014

        Biography

        Serko Limited, together with its subsidiaries, provides computer software solutions for expenses management and online travel bookings in New Zealand, Australia, North America, and internationally. The company offers Zeno Travel, an online booking tool that corporate travelers use to book flights, trains, hotels, rental cars, and airport transfers in line with their corporate travel policies; and Zeno Expense, a cloud-based expense management solution that allows users to manage cash claims, mileage, allowance, and corporate credit card expenses. It also provides Serko mobile, a mobile app for iPhones and android devices that gives users access to information and travel booking functionality on their mobile devices. The company sells and delivers its products through a network of travel management companies. Serko Limited was founded in 1994 and is headquartered in Auckland, New Zealand. 


        Company Analysis and Financial Data Status

        All financial data provided by Standard & Poor's Capital IQ.
        DataLast Updated (UTC time)
        Company Analysis2020/01/18 10:40
        End of Day Share Price2020/01/17 00:00
        Earnings2019/09/30
        Annual Earnings2019/03/31


        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.