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PTC

PTC NasdaqGS:PTC Stock Report

Last Price

US$125.03

Market Cap

US$14.7b

7D

3.9%

1Y

-5.3%

Updated

12 Aug, 2022

Data

Company Financials +
PTC fundamental analysis
Snowflake Score
Valuation5/6
Future Growth4/6
Past Performance6/6
Financial Health4/6
Dividends0/6

PTC Stock Overview

PTC Inc. operates as software and services company in the Americas, Europe, and the Asia Pacific.

PTC Competitors

Price History & Performance

Summary of all time highs, changes and price drops for PTC
Historical stock prices
Current Share PriceUS$125.03
52 Week HighUS$136.00
52 Week LowUS$96.55
Beta1.16
1 Month Change24.24%
3 Month Change14.13%
1 Year Change-5.29%
3 Year Change91.24%
5 Year Change133.61%
Change since IPO5,615.66%

Recent News & Updates

Jul 14
PTC (NASDAQ:PTC) Shareholders Will Want The ROCE Trajectory To Continue

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...

Jul 05

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

PTCUS SoftwareUS Market
7D3.9%0.7%3.2%
1Y-5.3%-15.5%-10.1%

Return vs Industry: PTC exceeded the US Software industry which returned -16.6% over the past year.

Return vs Market: PTC exceeded the US Market which returned -11.7% over the past year.

Price Volatility

Is PTC's price volatile compared to industry and market?
PTC volatility
PTC Average Weekly Movement5.9%
Software Industry Average Movement10.1%
Market Average Movement7.7%
10% most volatile stocks in US Market16.9%
10% least volatile stocks in US Market3.2%

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

FoundedEmployeesCEOWebsite
19856,455Jim Heppelmannhttps://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

How do PTC's earnings and revenue compare to its market cap?
PTC fundamental statistics
Market CapUS$14.69b
Earnings (TTM)US$499.19m
Revenue (TTM)US$1.91b

29.4x

P/E Ratio

7.7x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
PTC income statement (TTM)
RevenueUS$1.91b
Cost of RevenueUS$390.20m
Gross ProfitUS$1.52b
Other ExpensesUS$1.02b
EarningsUS$499.19m

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)4.25
Gross Margin79.53%
Net Profit Margin26.19%
Debt/Equity Ratio66.1%

How did PTC perform over the long term?

See historical performance and comparison
We’ve recently updated our valuation analysis.

Valuation

Is PTC undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

5/6

Valuation 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.

PTC key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue8.4x
Enterprise Value/EBITDA32.6x
PEG Ratio1.7x

Price to Earnings Ratio vs Peers

How does PTC's PE Ratio compare to its peers?

PTC PE Ratio vs Peers
The above table shows the PE ratio for PTC vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyPEEstimated GrowthMarket Cap
Peer Average82.3x
PCTY Paylocity Holding
160.9x20.7%US$14.6b
TYL Tyler Technologies
95.2x16.9%US$17.0b
FICO Fair Isaac
33.6x9.9%US$12.4b
CTXS Citrix Systems
39.5x-3.4%US$13.1b
PTC PTC
29.4x17.0%US$14.7b

Price-To-Earnings vs Peers: PTC is good value based on its Price-To-Earnings Ratio (29.4x) compared to the peer average (82.3x).


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 (29.4x) compared to the US Software industry average (48.5x)


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.

PTC PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio29.4x
Fair PE Ratio36x

Price-To-Earnings vs Fair Ratio: PTC is good value based on its Price-To-Earnings Ratio (29.4x) compared to the estimated Fair Price-To-Earnings Ratio (36x).


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 ($125.03) is trading below our estimate of fair value ($258.39)

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

4/6

Future 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 (14.4% 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

6/6

Past 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 18.7%.


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

4/6

Financial 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

0/6

Dividend 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.


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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 ($USD13.05M) is about average for companies of similar size in the US market ($USD12.88M).

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$14.687b
  • 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

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2022/08/12 00:00
End of Day Share Price2022/08/12 00:00
Earnings2022/06/30
Annual Earnings2021/09/30


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.