| Snowflake Score | |
|---|---|
| Valuation | 5/6 |
| Future Growth | 4/6 |
| Past Performance | 6/6 |
| Financial Health | 4/6 |
| Dividends | 0/6 |
PTC Stock Overview
PTC Inc. operates as software and services company in the Americas, Europe, and the Asia Pacific.
PTC Competitors
Price History & Performance
| Historical stock prices | |
|---|---|
| Current Share Price | US$123.02 |
| 52 Week High | US$136.74 |
| 52 Week Low | US$96.55 |
| Beta | 1.16 |
| 1 Month Change | 16.79% |
| 3 Month Change | 15.71% |
| 1 Year Change | -8.53% |
| 3 Year Change | 92.43% |
| 5 Year Change | 127.77% |
| Change since IPO | 5,523.77% |
Recent News & Updates
PTC (NASDAQ:PTC) Shareholders Will Want The ROCE Trajectory To Continue
If you're looking for a multi-bagger, there's a few things to keep an eye out for. Typically, we'll want to notice a...
PTC: Attractive Valuation Ruined By Stock Based Compensation
PTC is a very attractive business with strong competitive advantages, derived from high-quality software products and high customer switching costs. We expect the company to grow at a rapid pace in the next few years, especially in its growth markets of IoT and AR. The valuation of the company would be attractive were it not for the excessive amounts of stock-based compensation it has been giving out. PTC (PTC) is an attractive software business operating in the higher end of the CAD market, it is also strong in product lifecycle management software, and is expanding into other growth areas such as IoT, Augmented Reality, and mid-market CAD. These initiatives should keep growth at a decent rate for the foreseeable future. PTC's CREO is considered a must-have in many complex engineering projects. Meanwhile IoT and AR are growing at a very rapid pace, as well as its Onshape mid-market SaaS CAD software. PTC Investor Presentation The company has almost completed a shift to a subscription model from a license-based model. The company has been very smart partnering with Microsoft (MSFT) and Rockwell Automation (ROK) to promote its IoT platform ThingWorx, which is considered among the best, and where it is gaining a lot of traction. Competitive Advantages Besides the intellectual property that goes into the products, and the learning curves the company has had to go through each version of its software to make it better, we believe the strongest competitive moat actually comes from switching costs. The software PTC develops is complex, and it takes a long time to master. As such, it is unlikely that a user would switch quickly to an alternative for a modestly lower price. Growth With respect to CAD software, the company expects modest growth, and its objective is to only "beat the market", which is growing at a ~5% CAGR. Meanwhile PTC has grown the last 3 years at a ~9.7% CAGR. The two key products the company is counting on to win in this market are Creo & Onshape. The PLM software market has been growing at ~4.7% CAGR, but PTC has been gaining share and growing faster than the market with a 14.1% trailing 3 years CAGR. The company also believes it can continue to "beat the market" in this segment going forward. The growth markets where the company is content to simply "meet the market" are IoT and Augmented Reality. IoT has been growing at a ~17.9% CAGR, and PTC has grown at ~19.1% CAGR the last three years. As for Augmented Reality, the market has been growing at 61.9% CAGR, with PTC growing even faster with a 70.4% CAGR the last three years. This combination of "beating the market" in the low-growth segments, and "meeting the market" in the high-growth segments should result in an overall attractive growth rate for the company. The company has been able to take share in every market segment, which is quite remarkable and speaks volumes to the strength of its offering. The company had some growth headwinds during its business model transformation to a subscription model, but the last three years it has posted very strong growth averaging ~16.8%. It has decelerated recently, so this is something to keep an eye on going forward. Data by YCharts Financials PTC has strong and improving profit margins, with the gross profit margin recently above 80%, and the operating margin above 30%. These are extremely attractive margins, especially for a company that is still growing at a good pace. Data by YCharts PTC believes that the best indicators to judge its business are annual run rate, ARR, and adjusted free cash flow. While we agree that ARR is the best indicator of PTC's top-line performance, we have an issue with adjusted free cash flow to judge PTC's bottom-line performance. The problem we have is that adjusted free cash flow ignores stock-based compensation, which we consider a very real expense, and as we'll see, a significant expense in PTC's case. In any case, PTC guided for ARR of between $2.0 and $2.4 billion for FY24 and FCF of $700 million to $900 million during their last investor day event. Balance Sheet The company has stated that for the remainder of FY22 they plan to focus on deleveraging, and that going forward, their goal is to return approximately 50% of FCF to shareholders via share repurchases, assuming their debt/EBITDA is less than 3x. The company has a decent balance sheet with ~$307 million in cash and short-term investments, and about $1.26 billion in total long-term debt. Data by YCharts The debt/EBITDA is currently below the 3x target the company has set for itself, so we expect the company to be more aggressive with buybacks going forward. Data by YCharts Stock-based compensation So far we have been positively impressed with what we have seen about the company. Where we are disappointed is when we see the vast amounts of stock-based compensation the company is giving out, especially when it is telling its shareholders to focus on the adjusted free cash flow of the company. While stock-based compensation is a non-cash expense, we consider it a very real expense, so we would subtract it when doing a valuation model, especially given how significant it is in this case. It is almost half of the FCF it is expecting for the year. Data by YCharts Despite the company being active buying back shares, the number of shares outstanding has not declined much given all the stock based compensation it has given out. Data by YCharts Valuation PTC is trading with an enterprise value of ~$13 billion, which at first glance appears reasonable given the expectation that by FY2024 the company could be generating somewhere between $700 million and $900 million in FCF. However, we'll have to make some assumptions regarding stock-based compensation when estimating an intrinsic value for the shares. Data by YCharts First, looking at the EV/Revenues multiple, we can see that it is getting closer to the ten year average, which suggests that maybe shares are becoming more reasonably valued. Data by YCharts We built a simple DCF model to approximate an intrinsic value per share, without taking stock-based compensation into account, and taking stock-based compensation into account. For stock-based compensation we assumed an expense of $170 million for FY22, growing at the same rate as we assumed cash flows to grow. We could not find any statement by the company describing their stock-based compensation plan for the next few years, so we could be under-estimating it or over-estimating it. Given how fast stock-based compensation has been growing, it's possible the impact might end up being even more substantial than what we are modeling.
Shareholder Returns
| PTC | US Software | US Market | |
|---|---|---|---|
| 7D | 1.1% | -0.6% | 1.2% |
| 1Y | -8.5% | -14.6% | -11.6% |
Return vs Industry: PTC exceeded the US Software industry which returned -17.4% over the past year.
Return vs Market: PTC exceeded the US Market which returned -13.5% over the past year.
Price Volatility
| PTC volatility | |
|---|---|
| PTC Average Weekly Movement | 6.0% |
| Software Industry Average Movement | 10.5% |
| Market Average Movement | 7.9% |
| 10% most volatile stocks in US Market | 17.0% |
| 10% least volatile stocks in US Market | 3.2% |
Stable Share Price: PTC is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 6% a week.
Volatility Over Time: PTC's weekly volatility (6%) has been stable over the past year.
About the Company
| Founded | Employees | CEO | Website |
|---|---|---|---|
| 1985 | 6,455 | Jim Heppelmann | https://www.ptc.com |
PTC Inc. operates as software and services company in the Americas, Europe, and the Asia Pacific. The company operates in two segments, Software Products and Professional Services. It offers ThingWorx platform, which offers a set of capabilities that enable enterprises to digitally transform every aspect of their business with innovative solutions that are simple to create, easy to implement, scalable to meet future needs, and designed to enable customers to accelerate time to value; and Vuforia, which enables the visualization of digital information in a physical context and the creation of AR.
PTC Fundamentals Summary
| PTC fundamental statistics | |
|---|---|
| Market Cap | US$14.45b |
| Earnings (TTM) | US$499.19m |
| Revenue (TTM) | US$1.91b |
28.9x
P/E Ratio7.6x
P/S RatioIs PTC overvalued?
See Fair Value and valuation analysisEarnings & Revenue
| PTC income statement (TTM) | |
|---|---|
| Revenue | US$1.91b |
| Cost of Revenue | US$390.20m |
| Gross Profit | US$1.52b |
| Other Expenses | US$1.02b |
| Earnings | US$499.19m |
Last Reported Earnings
Jun 30, 2022
Next Earnings Date
n/a
| Earnings per share (EPS) | 4.25 |
| Gross Margin | 79.53% |
| Net Profit Margin | 26.19% |
| Debt/Equity Ratio | 66.1% |
How did PTC perform over the long term?
See historical performance and comparisonValuation
Is PTC undervalued compared to its fair value, analyst forecasts and its price relative to the market?
Valuation Score
5/6Valuation Score 5/6
Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Analyst Forecast
Key Valuation Metric
Which metric is best to use when looking at relative valuation for PTC?
Other financial metrics that can be useful for relative valuation.
| What is PTC's n/a Ratio? | |
|---|---|
| n/a Ratio | 0x |
| n/a | n/a |
| Market Cap | US$14.45b |
| Key Statistics | |
|---|---|
| Enterprise Value/Revenue | 8.3x |
| Enterprise Value/EBITDA | 32.1x |
| PEG Ratio | 1.7x |
Price to Earnings Ratio vs Peers
How does PTC's PE Ratio compare to its peers?
| PTC PE Ratio vs Peers |
|---|
| Company | PE | Estimated Growth | Market Cap |
|---|---|---|---|
| Peer Average | 83.7x | ||
PCTY Paylocity Holding | 164.6x | 20.7% | US$14.9b |
TYL Tyler Technologies | 96.6x | 16.9% | US$17.3b |
FICO Fair Isaac | 34.3x | 9.9% | US$12.7b |
CTXS Citrix Systems | 39.4x | -3.4% | US$13.0b |
PTC PTC | 28.9x | 17.0% | US$14.5b |
Price-To-Earnings vs Peers: PTC is good value based on its Price-To-Earnings Ratio (28.9x) compared to the peer average (83.7x).
Price to Earnings Ratio vs Industry
How does PTC's PE Ratio compare vs other companies in the US Software Industry?
Price-To-Earnings vs Industry: PTC is good value based on its Price-To-Earnings Ratio (28.9x) compared to the US Software industry average (43.5x)
Price to Earnings Ratio vs Fair Ratio
What is PTC's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.
| Fair Ratio | |
|---|---|
| Current PE Ratio | 28.9x |
| Fair PE Ratio | 35.9x |
Price-To-Earnings vs Fair Ratio: PTC is good value based on its Price-To-Earnings Ratio (28.9x) compared to the estimated Fair Price-To-Earnings Ratio (35.9x).
Share Price vs Fair Value
What is the Fair Price of PTC when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.
Below Fair Value: PTC ($123.02) is trading below our estimate of fair value ($258.63)
Significantly Below Fair Value: PTC is trading below fair value by more than 20%.
Analyst Price Targets
What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?
Analyst Forecast: Target price is less than 20% higher than the current share price.
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Future Growth
How is PTC forecast to perform in the next 1 to 3 years based on estimates from 11 analysts?
Future Growth Score
4/6Future Growth Score 4/6
Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE
17.0%
Forecasted annual earnings growth
Earnings and Revenue Growth Forecasts
Analyst Future Growth Forecasts
Earnings vs Savings Rate: PTC's forecast earnings growth (17% per year) is above the savings rate (1.9%).
Earnings vs Market: PTC's earnings (17% per year) are forecast to grow faster than the US market (14.6% per year).
High Growth Earnings: PTC's earnings are forecast to grow, but not significantly.
Revenue vs Market: PTC's revenue (8.8% per year) is forecast to grow faster than the US market (7.9% per year).
High Growth Revenue: PTC's revenue (8.8% per year) is forecast to grow slower than 20% per year.
Earnings per Share Growth Forecasts
Future Return on Equity
Future ROE: PTC's Return on Equity is forecast to be high in 3 years time (22.8%)
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Past Performance
How has PTC performed over the past 5 years?
Past Performance Score
6/6Past Performance Score 6/6
Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE
67.1%
Historical annual earnings growth
Earnings and Revenue History
Quality Earnings: PTC has high quality earnings.
Growing Profit Margin: PTC's current net profit margins (26.2%) are higher than last year (13.8%).
Past Earnings Growth Analysis
Earnings Trend: PTC has become profitable over the past 5 years, growing earnings by 67.1% per year.
Accelerating Growth: PTC's earnings growth over the past year (110.3%) exceeds its 5-year average (67.1% per year).
Earnings vs Industry: PTC earnings growth over the past year (110.3%) exceeded the Software industry 18.5%.
Return on Equity
High ROE: PTC's Return on Equity (23.1%) is considered high.
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Financial Health
How is PTC's financial position?
Financial Health Score
4/6Financial Health Score 4/6
Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage
Financial Position Analysis
Short Term Liabilities: PTC's short term assets ($948.4M) exceed its short term liabilities ($769.7M).
Long Term Liabilities: PTC's short term assets ($948.4M) do not cover its long term liabilities ($1.7B).
Debt to Equity History and Analysis
Debt Level: PTC's net debt to equity ratio (51.1%) is considered high.
Reducing Debt: PTC's debt to equity ratio has reduced from 85.3% to 66.1% over the past 5 years.
Debt Coverage: PTC's debt is well covered by operating cash flow (31%).
Interest Coverage: PTC's interest payments on its debt are well covered by EBIT (8.9x coverage).
Balance Sheet
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Dividend
What is PTC current dividend yield, its reliability and sustainability?
Dividend Score
0/6Dividend Score 0/6
Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Cash Flow Coverage
Dividend Yield vs Market
Notable Dividend: Unable to evaluate PTC's dividend yield against the bottom 25% of dividend payers, as the company has not reported any recent payouts.
High Dividend: Unable to evaluate PTC's dividend yield against the top 25% of dividend payers, as the company has not reported any recent payouts.
Stability and Growth of Payments
Stable Dividend: Insufficient data to determine if PTC's dividends per share have been stable in the past.
Growing Dividend: Insufficient data to determine if PTC's dividend payments have been increasing.
Earnings Payout to Shareholders
Earnings Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.
Cash Payout to Shareholders
Cash Flow Coverage: Unable to calculate sustainability of dividends as PTC has not reported any payouts.
Discover strong dividend paying companies
Management
How experienced are the management team and are they aligned to shareholders interests?
3.2yrs
Average management tenure
CEO
Jim Heppelmann (58 yo)
13.42yrs
Tenure
US$13,048,375
Compensation
Mr. James E. Heppelmann, also known as Jim, has been an Independent Director of Agile Growth Corp. since 2021. He has been the Chief Executive Officer of PTC Inc. since October 1, 2010 and has been its Pre...
CEO Compensation Analysis
Compensation vs Market: Jim's total compensation ($USD13.05M) is about average for companies of similar size in the US market ($USD13.03M).
Compensation vs Earnings: Jim's compensation has been consistent with company performance over the past year.
Leadership Team
Experienced Management: PTC's management team is considered experienced (3.2 years average tenure).
Board Members
Experienced Board: PTC's board of directors are considered experienced (6.1 years average tenure).
Ownership
Who are the major shareholders and have insiders been buying or selling?
Insider Trading Volume
Insider Buying: PTC 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
PTC Inc.'s employee growth, exchange listings and data sources
Key Information
- Name: PTC Inc.
- Ticker: PTC
- Exchange: NasdaqGS
- Founded: 1985
- Industry: Application Software
- Sector: Software
- Implied Market Cap: US$14.451b
- Shares outstanding: 117.47m
- Website: https://www.ptc.com
Number of Employees
Location
- PTC Inc.
- 121 Seaport Boulevard
- Boston
- Massachusetts
- 2210
- United States
Listings
Company Analysis and Financial Data Status
| Data | Last Updated (UTC time) |
|---|---|
| Company Analysis | 2022/08/10 00:00 |
| End of Day Share Price | 2022/08/10 00:00 |
| Earnings | 2022/06/30 |
| Annual Earnings | 2021/09/30 |
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.