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.

Snowflake

Flawless balance sheet with high growth potential.

Rewards

Trading at 11.6% below its fair value

Revenue is forecast to grow by 35.01% next year

Earnings have grown 44.5% per year over the past 5 years

Risk Analysis

High level of non-cash earnings

Highly volatile share price over past 3 months

Current net profit margin (7%) is lower than last year (10%)

Shareholders have been diluted in the past year


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

-3.7%

SKO

0.9%

NZ Software

1.1%

NZ Market


1 Year Return

42.6%

SKO

5.6%

NZ Software

16.5%

NZ Market

Return vs Industry: SKO exceeded the NZ Software industry which returned 5.6% over the past year.

Return vs Market: SKO exceeded the NZ Market which returned 16.5% over the past year.


Shareholder returns

SKOIndustryMarket
7 Day-3.7%0.9%1.1%
30 Day20.3%7.5%-1.1%
90 Day12.7%-11.3%1.6%
1 Year42.6%42.6%7.2%5.6%21.5%16.5%
3 Year1240.0%1240.0%93.2%82.7%57.1%36.5%
5 Year369.0%369.0%150.0%132.8%94.0%50.4%

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?

11.6%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: SKO (NZ$4.69) is trading below our estimate of fair value (NZ$5.31)

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


Price To Earnings Ratio

PE vs Industry: SKO is poor value based on its PE Ratio (224.5x) compared to the Software industry average (40.5x).

PE vs Market: SKO is poor value based on its PE Ratio (224.5x) compared to the NZ market (18.6x).


Price to Earnings Growth Ratio

PEG Ratio: SKO is poor value based on its PEG Ratio (8.1x)


Price to Book Ratio

PB vs Industry: SKO is overvalued based on its PB Ratio (14.5x) compared to the NZ Software industry average (3.4x).


Next Steps

Future Growth

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

27.9%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: SKO's forecast earnings growth (27.9% per year) is above the savings rate (2.4%).

Earnings vs Market: SKO's earnings (27.9% per year) are forecast to grow faster than the NZ market (7.8% per year).

High Growth Earnings: earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: SKO's revenue (25.2% per year) is forecast to grow faster than the NZ market (4.5% per year).

High Growth Revenue: SKO's revenue (25.2% 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 (13.1%).


Next Steps

Past Performance

How has Serko performed over the past 5 years?

44.5%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: SKO has a high level of non-cash earnings.

Growing Profit Margin: SKO's current net profit margins (7%) are lower than last year (10%).


Past Earnings Growth Analysis

Earnings Trend: SKO has become profitable over the past 5 years, growing earnings by 44.5% per year.

Accelerating Growth: SKO's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: SKO had negative earnings growth (-10.9%) over the past year, making it difficult to compare to the Software industry average (21.4%).


Return on Equity

High ROE: SKO's Return on Equity (6.2%) is considered low.


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$21.6M) exceeds its short term liabilities (NZ$6.9M)

Long Term Liabilities: SKO's short term assets (21.6M) exceeds its long term liabilities (283.0K)


Debt to Equity History and Analysis

Debt Level: SKO's debt to equity ratio (0.8%) is considered satisfactory

Reducing Debt: SKO had negative shareholder equity 5 years ago, but is now positive and has therefore improved.

Debt Coverage: SKO's debt is well covered by operating cash flow (1796.6%).

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


Balance Sheet

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

Debt Coverage by Assets: SKO's debt is covered by short term assets (assets are 106.6x debt).


Next Steps

Dividend

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


Dividend Yield vs Market

companyn/amarketbottom25%3.1%markettop25%5.5%industryaverage1.2%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?

2.8yrs

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 ($USD403.67K) is above average for companies of similar size in the NZ market ($USD0.00).

Compensation vs Earnings: Darrin's compensation has increased by more than 20% whilst company earnings have fallen more than 20% in the past year.


Management Age and Tenure

2.8yrs

Average Tenure

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


Board Age and Tenure

9.1yrs

Average Tenure

Experienced Board: SKO's board of directors are considered experienced (9.1 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$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
Claudia Batten
EntityIndividual
Role
Member of the Board of Directors
Independent Non-Executive Director
Shares1,001.03
Max PriceNZ$4.01
BuyNZ$4,01407 Oct 19
Simon Botherway
EntityIndividual
Role
Chairman of the Board
Independent Non-Executive Chairman
Shares1,001
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
Simon Botherway
EntityIndividual
Role
Chairman of the Board
Independent Non-Executive Chairman
Shares1,108.55
Max PriceNZ$3.60
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
SellNZ$1,425,35508 Apr 19
First NZ Capital Ltd., Asset Management Arm
EntityCompany
Shares464,467
Max PriceNZ$3.07
SellNZ$207,00708 Apr 19
Harbour Asset Management Limited
EntityCompany
Shares64,578
Max PriceNZ$3.21
BuyNZ$1,684,92508 Apr 19
First NZ Capital Ltd., Asset Management Arm
EntityCompany
Shares552,770
Max PriceNZ$3.05
BuyNZ$1,921,50108 Apr 19
Harbour Asset Management Limited
EntityCompany
Shares675,651
Max PriceNZ$2.84
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$4,04103 Apr 19
Simon Botherway
EntityIndividual
Role
Chairman of the Board
Independent Non-Executive Chairman
Shares1,283
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
BuyNZ$4,07810 Jan 19
Claudia Batten
EntityIndividual
Role
Member of the Board of Directors
Independent Non-Executive Director
Shares1,482.97
Max PriceNZ$2.75
BuyNZ$4,07810 Jan 19
Simon Botherway
EntityIndividual
Role
Chairman of the Board
Independent Non-Executive Chairman
Shares1,482.97
Max PriceNZ$2.75

Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 8.7%.


Management Team

  • Darrin Grafton

    Co-Founder

    • Tenure: 0yrs
    • Compensation: NZ$630.73k
  • Tony D'Astolfo

    Senior Vice President of NORAM

    • Tenure: 1.6yrs
  • Susan Putt

    Chief Financial Officer

    • Tenure: 2.8yrs
  • Bob Shaw

    Co-Founder

    • Tenure: 12.6yrs
    • Compensation: NZ$430.83k
  • Michael Thorburn

    Head of Partnerships

    • Tenure: 0yrs
  • Charlie Nowaczek

    Chief Operating Officer

    • Tenure: 2.8yrs
  • John Challis

    Head of Business Development

    • Tenure: 0yrs
  • Joanne Phipps

    Acting Head of Product

    • Tenure: 5.8yrs
  • Phil Ball

    Chief Information Security Officer

    • Tenure: 1.8yrs
  • Murray Warner

    Head of Australasian market

    • Tenure: 0yrs

Board Members

  • Claudia Batten

    Independent Non-Executive Director

    • Tenure: 5.6yrs
    • Compensation: NZ$83.44k
  • Darrin Grafton

    Co-Founder

    • Tenure: 0yrs
    • Compensation: NZ$630.73k
  • Simon Botherway

    Independent Non-Executive Chairman

    • Tenure: 0yrs
    • Compensation: NZ$107.83k
  • Clyde McConaghy (57yo)

    Independent Non-Executive Director

    • Tenure: 5.6yrs
    • Compensation: NZ$83.44k
  • Bob Shaw

    Co-Founder

    • Tenure: 12.6yrs
    • 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$417.789m
  • Shares outstanding: 90.82m
  • 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 com ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/11/14 10:40
End of Day Share Price2019/11/13 00:00
Earnings2019/03/31
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.