What Does SS&C Technologies Holdings, Inc.'s (NASDAQ:SSNC) Share Price Indicate?

Today we're going to take a look at the well-established SS&C Technologies Holdings, Inc. (NASDAQ:SSNC). The company's stock received a lot of attention from a substantial price movement on the NASDAQGS over the last few months, increasing to US$62.76 at one point, and dropping to the lows of US$54.65. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether SS&C Technologies Holdings' current trading price of US$55.32 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at SS&C Technologies Holdings’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for SS&C Technologies Holdings

Is SS&C Technologies Holdings Still Cheap?

According to my price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 21.99x is currently trading slightly below its industry peers’ ratio of 22.47x, which means if you buy SS&C Technologies Holdings today, you’d be paying a reasonable price for it. And if you believe that SS&C Technologies Holdings should be trading at this level in the long run, then there’s not much of an upside to gain over and above other industry peers. So, is there another chance to buy low in the future? Given that SS&C Technologies Holdings’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

Can we expect growth from SS&C Technologies Holdings?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. With profit expected to grow by 45% over the next couple of years, the future seems bright for SS&C Technologies Holdings. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What This Means For You

Are you a shareholder? It seems like the market has already priced in SSNC’s positive outlook, with shares trading around industry price multiples. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at SSNC? Will you have enough conviction to buy should the price fluctuate below the industry PE ratio?

Are you a potential investor? If you’ve been keeping an eye on SSNC, now may not be the most optimal time to buy, given it is trading around industry price multiples. However, the positive outlook is encouraging for SSNC, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

If you'd like to know more about SS&C Technologies Holdings as a business, it's important to be aware of any risks it's facing. For instance, we've identified 2 warning signs for SS&C Technologies Holdings (1 is a bit unpleasant) you should be familiar with.

If you are no longer interested in SS&C Technologies Holdings, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.