SPS Commerce (NasdaqGS:SPSC) - Share price, News & Analysis

Q: What is the Fair Price of SPSC when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

SPSC ($128.15) is trading above our estimate of [[fair value]] ($121.89)

SPSC fundamental analysis
Snowflake Score
Valuation	1/6
Future Growth	4/6
Past Performance	2/6
Financial Health	6/6
Dividends	0/6

SPSC Stock Overview

SPS Commerce, Inc. provides cloud-based supply chain management solutions worldwide.

Rewards

Earnings are forecast to grow 22.87% per year

Earnings have grown 34.7% per year over the past 5 years

Risk Analysis

No risks detected for SPSC from our risk checks.

SPS Commerce Competitors

NCR

NYSE:NCR

US$4.7b

Alarm.com Holdings

NasdaqGS:ALRM

US$3.8b

DoubleVerify Holdings

NYSE:DV

US$4.5b

Dropbox

NasdaqGS:DBX

US$8.8b

Price History & Performance

Summary of all time highs, changes and price drops for SPS Commerce
Historical stock prices
Current Share Price	US$128.15
52 Week High	US$174.42
52 Week Low	US$96.41
Beta	0.76
1 Month Change	12.48%
3 Month Change	24.47%
1 Year Change	13.74%
3 Year Change	149.37%
5 Year Change	337.67%
Change since IPO	1,784.56%

Shareholder Returns

	SPSC	US Software	US Market
7D	-1.1%	-0.6%	1.2%
1Y	13.7%	-14.6%	-11.6%

Return vs Industry: SPSC exceeded the US Software industry which returned -17.4% over the past year.

Return vs Market: SPSC exceeded the US Market which returned -13.5% over the past year.

Price Volatility

Is SPSC's price volatile compared to industry and market?
SPSC volatility
SPSC Average Weekly Movement	6.3%
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: SPSC is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 6% a week.

Volatility Over Time: SPSC's weekly volatility (6%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
1987	1,901	Archie Black	https://www.spscommerce.com

SPS Commerce, Inc. provides cloud-based supply chain management solutions worldwide. It offers solutions through the SPS Commerce, a cloud-based platform that enhances the way retailers, suppliers, grocers, distributors, and logistics firms manage and fulfill omnichannel orders, optimize sell-through performance, and automate new trading relationships. The company also provides Fulfillment solution that provides fulfillment automation and replaces or augments an organization’s existing staff and trading partner electronic communication infrastructure by enabling easy compliance with retailers’ rulebooks, automatic, and digital exchange of information among numerous trading partners through various protocols, and greater visibility into the journey of an order; and Analytics solution, which consists of data analytics applications that enables customers to enhance their visibility across supply chains through greater analytics capabilities.

SPS Commerce Fundamentals Summary

How do SPS Commerce's earnings and revenue compare to its market cap?
SPSC fundamental statistics
Market Cap	US$4.62b
Earnings (TTM)	US$47.57m
Revenue (TTM)	US$415.01m

97.0x

P/E Ratio

11.1x

P/S Ratio

Is SPSC overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
SPSC income statement (TTM)
Revenue	US$415.01m
Cost of Revenue	US$142.90m
Gross Profit	US$272.12m
Other Expenses	US$224.55m
Earnings	US$47.57m

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)	1.32
Gross Margin	65.57%
Net Profit Margin	11.46%
Debt/Equity Ratio	0%

How did SPSC perform over the long term?

See historical performance and comparison

We’ve recently updated our valuation analysis.

Valuation

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

Valuation Score

1/6

Valuation Score 1/6

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 SPSC?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for SPSC. This is calculated by dividing SPSC's market cap by their current preferred multiple.
What is SPSC's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	US$4.62b

SPSC 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/Revenue	10.5x
Enterprise Value/EBITDA	50.6x
PEG Ratio	4.2x

Price to Earnings Ratio vs Peers

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

SPSC PE Ratio vs Peers

The above table shows the PE ratio for SPSC vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	69.8x
NCR NCR	76.1x	57.3%	US$4.7b
ALRM Alarm.com Holdings	89.2x	15.4%	US$3.8b
DV DoubleVerify Holdings	88.3x	30.9%	US$4.5b
DBX Dropbox	25.8x	-11.4%	US$8.8b
SPSC SPS Commerce	97x	22.9%	US$4.6b

Price-To-Earnings vs Peers: SPSC is expensive based on its Price-To-Earnings Ratio (97x) compared to the peer average (69.8x).

Price to Earnings Ratio vs Industry

How does SPSC's PE Ratio compare vs other companies in the US Software Industry?

Price-To-Earnings vs Industry: SPSC is expensive based on its Price-To-Earnings Ratio (97x) compared to the US Software industry average (43.5x)

Price to Earnings Ratio vs Fair Ratio

What is SPSC'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.

SPSC PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	97x
Fair PE Ratio	35.4x

Price-To-Earnings vs Fair Ratio: SPSC is expensive based on its Price-To-Earnings Ratio (97x) compared to the estimated Fair Price-To-Earnings Ratio (35.4x).

Share Price vs Fair Value

What is the Fair Price of SPSC when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: SPSC ($128.15) is trading above our estimate of fair value ($121.89)

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

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 more than 20% higher than the current share price and analysts are within a statistically confident range of agreement.

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Future Growth

How is SPS Commerce forecast to perform in the next 1 to 3 years based on estimates from 9 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

22.9%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: SPSC's forecast earnings growth (22.9% per year) is above the savings rate (1.9%).

Earnings vs Market: SPSC's earnings (22.9% per year) are forecast to grow faster than the US market (14.6% per year).

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

Revenue vs Market: SPSC's revenue (14.6% per year) is forecast to grow faster than the US market (7.9% per year).

High Growth Revenue: SPSC's revenue (14.6% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: Insufficient data to determine if SPSC's Return on Equity is forecast to be high in 3 years time

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Past Performance

How has SPS Commerce performed over the past 5 years?

Past Performance Score

2/6

Past Performance Score 2/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

34.7%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: SPSC has high quality earnings.

Growing Profit Margin: SPSC's current net profit margins (11.5%) are lower than last year (13%).

Past Earnings Growth Analysis

Earnings Trend: SPSC's earnings have grown significantly by 34.7% per year over the past 5 years.

Accelerating Growth: SPSC's earnings growth over the past year (5.1%) is below its 5-year average (34.7% per year).

Earnings vs Industry: SPSC earnings growth over the past year (5.1%) underperformed the Software industry 18.5%.

Return on Equity

High ROE: SPSC's Return on Equity (9.6%) is considered low.

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Financial Health

How is SPS Commerce's financial position?

Financial Health Score

6/6

Financial Health Score 6/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: SPSC's short term assets ($365.5M) exceed its short term liabilities ($101.2M).

Long Term Liabilities: SPSC's short term assets ($365.5M) exceed its long term liabilities ($24.5M).

Debt to Equity History and Analysis

Debt Level: SPSC is debt free.

Reducing Debt: SPSC has not had any debt for past 5 years.

Debt Coverage: SPSC has no debt, therefore it does not need to be covered by operating cash flow.

Interest Coverage: SPSC has no debt, therefore coverage of interest payments is not a concern.

Balance Sheet

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Dividend

What is SPS Commerce 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 SPSC's dividend yield against the bottom 25% of dividend payers, as the company has not reported any recent payouts.

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

Growing Dividend: Insufficient data to determine if SPSC'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 SPSC has not reported any payouts.

Discover strong dividend paying companies

Management

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

9.0yrs

Average management tenure

CEO

Archie Black (60 yo)

21.58yrs

Tenure

US$6,693,464

Compensation

Mr. Archie C. Black has been Chief Executive Officer at SPS Commerce, Inc. since 2001 and served as its President since 2001 until January 06, 2022. Mr. Black is responsible for the management and strategi...

CEO Compensation Analysis

Compensation vs Market: Archie's total compensation ($USD6.69M) is about average for companies of similar size in the US market ($USD6.59M).

Compensation vs Earnings: Archie's compensation has increased by more than 20% in the past year.

Leadership Team

Experienced Management: SPSC's management team is seasoned and experienced (9 years average tenure).

Board Members

Experienced Board: SPSC's board of directors are considered experienced (8.4 years average tenure).

Ownership

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

Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.

Ownership Breakdown

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

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	2021/12/31