SPS Commerce, Inc. (NASDAQ:SPSC): The Best Of Both Worlds

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SPS Commerce, Inc. (NASDAQ:SPSC) is a stock with outstanding fundamental characteristics. When we build an investment case, we need to look at the stock with a holistic perspective. In the case of SPSC, it is a company with great financial health as well as a a strong track record of performance. Below is a brief commentary on these key aspects. For those interested in digger a bit deeper into my commentary, take a look at the report on SPS Commerce here.

Flawless balance sheet with solid track record

Over the past few years, SPSC has more than doubled its earnings, with its most recent figure exceeding its annual average over the past five years. Not only did SPSC outperformed its past performance, its growth also exceeded the Software industry expansion, which generated a 22% earnings growth. This is what investors like to see! SPSC is financially robust, with ample cash on hand and short-term investments to meet upcoming liabilities. This suggests prudent control over cash and cost by management, which is an important determinant of the company’s health. Looking at SPSC’s capital structure, the company has no debt on its balance sheet. It has only utilized funding from its equity capital to run the business, which is typically normal for a small-cap company. Therefore the company has plenty of headroom to grow, and the ability to raise debt should it need to in the future.

NasdaqGS:SPSC Income Statement, June 25th 2019
NasdaqGS:SPSC Income Statement, June 25th 2019

Next Steps:

For SPS Commerce, I’ve compiled three fundamental aspects you should further research:

  1. Future Outlook: What are well-informed industry analysts predicting for SPSC’s future growth? Take a look at our free research report of analyst consensus for SPSC’s outlook.
  2. Valuation: What is SPSC worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether SPSC is currently mispriced by the market.
  3. Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of SPSC? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.