NasdaqGS:NUAN

Stock Analysis Report

Executive Summary

Nuance Communications, Inc. provides conversational artificial intelligence (AI) innovations that bring intelligence to everyday work and life.

Rewards

PE ratio (42.5x) is below the Software industry average (52.1x)

Earnings are forecast to grow 38.9% per year

Became profitable this year

Risk Analysis

Interest payments are not well covered by earnings

Highly volatile share price over past 3 months

Large one-off items impacting financial results



Snowflake Analysis

Reasonable growth potential and slightly overvalued.


Similar Companies

Share Price & News

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


Latest Share Price and Events

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


Market Performance


7 Day Return

2.1%

NUAN

1.7%

US Software

1.5%

US Market


1 Year Return

40.5%

NUAN

42.3%

US Software

20.1%

US Market

Return vs Industry: NUAN underperformed the US Software industry which returned 42.2% over the past year.

Return vs Market: NUAN exceeded the US Market which returned 20.1% over the past year.


Shareholder returns

NUANIndustryMarket
7 Day2.1%1.7%1.5%
30 Day17.3%7.7%1.4%
90 Day40.1%18.4%8.7%
1 Year61.6%40.5%43.9%42.3%22.7%20.1%
3 Year56.9%36.4%152.8%142.4%50.1%40.5%
5 Year91.8%66.7%224.7%201.5%73.1%54.1%

Price Volatility Vs. Market

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


Simply Wall St News

Valuation

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

42.52x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: NUAN ($23.14) is trading above our estimate of fair value ($12.45)

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


Price To Earnings Ratio

PE vs Industry: NUAN is good value based on its PE Ratio (42.5x) compared to the Software industry average (52.1x).

PE vs Market: NUAN is poor value based on its PE Ratio (42.5x) compared to the US market (18.4x).


Price to Earnings Growth Ratio

PEG Ratio: NUAN is poor value based on its PEG Ratio (1.1x)


Price to Book Ratio

PB vs Industry: NUAN is good value based on its PB Ratio (5.3x) compared to the US Software industry average (6x).


Next Steps

Future Growth

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

38.9%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: NUAN's forecast earnings growth (38.9% per year) is above the savings rate (1.7%).

Earnings vs Market: NUAN's earnings (38.9% per year) are forecast to grow faster than the US market (14.5% per year).

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

Revenue vs Market: NUAN's revenue (0.4% per year) is forecast to grow slower than the US market (7.6% per year).

High Growth Revenue: NUAN's revenue (0.4% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: NUAN's Return on Equity is forecast to be high in 3 years time (37.1%)


Next Steps

Past Performance

How has Nuance Communications performed over the past 5 years?

14.3%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: NUAN has a large one-off loss of $80.9M impacting its December 31 2019 financial results.

Growing Profit Margin: NUAN became profitable in the past.


Past Earnings Growth Analysis

Earnings Trend: NUAN has become profitable over the past 5 years, growing earnings by 14.3% per year.

Accelerating Growth: NUAN has become profitable in the last year, making the earnings growth rate difficult to compare to its 5-year average.

Earnings vs Industry: NUAN has become profitable in the last year, making it difficult to compare its past year earnings growth to the Software industry (17.1%).


Return on Equity

High ROE: NUAN's Return on Equity (12.5%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Nuance Communications's financial position?


Financial Position Analysis

Short Term Liabilities: NUAN's short term assets ($910.2M) exceed its short term liabilities ($534.3M).

Long Term Liabilities: NUAN's short term assets ($910.2M) do not cover its long term liabilities ($2.0B).


Debt to Equity History and Analysis

Debt Level: NUAN's debt to equity ratio (133.1%) is considered high.

Reducing Debt: NUAN's debt to equity ratio has increased from 83.7% to 133.1% over the past 5 years.


Balance Sheet

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

Debt Coverage by Assets: NUAN's debt is not covered by short term assets (assets are 0.6x debt).


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: NUAN is profitable, therefore cash runway is not a concern.

Forecast Cash Runway: NUAN is profitable, therefore cash runway is not a concern.


Next Steps

Dividend

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


Dividend Yield vs Market

companyn/amarketbottom25%1.4%markettop25%3.7%industryaverage1.2%forecastin3Yearsn/a

Current dividend yield vs market & industry

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

High Dividend: Unable to evaluate NUAN'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 NUAN's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if NUAN'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 NUAN's dividend in 3 years as they are not forecast to pay a notable one for the US market.


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

1.6yrs

Average management tenure


CEO

Mark Benjamin (48yo)

1.8yrs

Tenure

US$12,582,183

Compensation

Mr. Mark D. Benjamin has been Chief Executive Officer of Nuance Communications, Inc. since April 2018 and serves as its Director since April 2018 With extensive experience serving technology markets, Mr. B ...


CEO Compensation Analysis

Compensation vs Market: Mark's total compensation ($USD12.58M) is above average for companies of similar size in the US market ($USD6.26M).

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


Leadership Team

NamePositionTenureCompensationOwnership
Mark Benjamin
CEO & Director1.8yrsUS$12.58m0.055% $3.6m
Daniel Tempesta
Executive VP & CFO4.6yrsUS$6.90m0.13% $8.7m
Joseph Petro
Executive VP & CTO1.4yrsUS$5.78m0.094% $6.1m
Robert Weideman
Executive VP & GM of Enterprise Division7.3yrsUS$6.40m0.18% $11.8m
Thomas Beaudoin
Executive Vice President of Corporate Transformation11.5yrsUS$5.89m0.081% $5.3m
Arthur Giterman
Senior VP1.3yrsno data0.041% $2.7m
Mark Sherwood
Senior VP & Chief Information Officer1.6yrsno datano data
Tracy Krumme
Senior Vice President of Investor Relations0.8yrsno datano data
Wendy Cassity
Executive VP0yrsno data0.035% $2.3m
David Garfinkel
Senior Vice President of Corporate Development1.1yrsno datano data

1.6yrs

Average Tenure

50yo

Average Age

Experienced Management: NUAN's management team is not considered experienced ( 1.6 years average tenure), which suggests a new team.


Board Members

NamePositionTenureCompensationOwnership
Mark Benjamin
CEO & Director1.8yrsUS$12.58m0.055% $3.6m
Robert Finocchio
Independent Director4.8yrsUS$344.97k0.038% $2.5m
Sanjay Vaswani
Independent Director2yrsUS$344.97k0.011% $733.2k
Thomas Ebling
Independent Director1.4yrsUS$75.00k0.0048% $312.9k
Lloyd Carney
Independent Chairman of the Board1.4yrsUS$210.00k0.0084% $547.2k
Daniel Brennan
Independent Director1.4yrsUS$75.00k0.0086% $559.7k
Mark Laret
Independent Director9.7yrsUS$335.83k0.022% $1.4m
Laura Kaiser
Independent Director2.2yrsUS$324.97k0.016% $1.0m
Michal Katz
Independent Director1.4yrsUS$65.00k0.0036% $234.3k

1.8yrs

Average Tenure

57yo

Average Age

Experienced Board: NUAN's board of directors are not considered experienced ( 1.8 years average tenure), which suggests a new board.


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

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


Recent Insider Transactions

Ownership Breakdown

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


Top Shareholders

Company Information

Nuance Communications, Inc.'s company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Nuance Communications, Inc.
  • Ticker: NUAN
  • Exchange: NasdaqGS
  • Founded: 1992
  • Industry: Application Software
  • Sector: Software
  • Market Cap: US$6.546b
  • Shares outstanding: 282.89m
  • Website: https://www.nuance.com

Number of Employees


Location

  • Nuance Communications, Inc.
  • 1 Wayside Road
  • Burlington
  • Massachusetts
  • 1803
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
NUANNasdaqGS (Nasdaq Global Select)YesCommon SharesUSUSDDec 1995
SC2DB (Deutsche Boerse AG)YesCommon SharesDEEURDec 1995
SC2XTRA (XETRA Trading Platform)YesCommon SharesDEEURDec 1995
0K9KLSE (London Stock Exchange)YesCommon SharesGBUSDDec 1995

Biography

Nuance Communications, Inc. provides conversational artificial intelligence (AI) innovations that bring intelligence to everyday work and life. The company delivers solutions that understand, analyze, and respond to people - amplifying human intelligence to increase productivity and security. It offers customers high accuracy in automated speech recognition, natural language understanding capabilities, dialog and information management, biometric speaker authentication, text-to-speech, and domain knowledge along with professional services and implementation support. Its Healthcare segment provides clinical speech and clinical language understanding solutions that improve the clinical documentation process, from capturing the complete patient record to improving clinical documentation and quality measures for reimbursement. The company’s Enterprise segment primarily engages in using speech, natural language understanding, and artificial intelligence to provide automated customer solutions and services for voice, mobile, Web, and messaging channels. Its Other segment provides voicemail transcription services to mobile operators. The company serves organizations across healthcare, financial services, telecommunications, government, and retail. Nuance Communications, Inc. markets and sells its solutions and technologies directly through sales force, as well as through a network of resellers, including system integrators, independent software vendors, value-added resellers, distributors, hardware vendors, telecommunications carriers, and e-commerce Website worldwide. Nuance Communications, Inc. has a strategic partnership with Mila to collaborate on research and advance work in machine learning. The company was formerly known as ScanSoft, Inc. and changed its name to Nuance Communications, Inc. in October 2005. Nuance Communications, Inc. was founded in 1992 and is headquartered in Burlington, Massachusetts. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/17 00:16
End of Day Share Price2020/02/14 00:00
Earnings2019/12/31
Annual Earnings2019/09/30


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.