NYSE:SWCH

Stock Analysis Report

Executive Summary

Switch, Inc., through its subsidiary, Switch, Ltd., provides colocation space and related services primarily to technology and digital media companies in the United States.

Rewards

Earnings are forecast to grow 38.11% per year

Became profitable this year

Risk Analysis

Interest payments are not well covered by earnings

Shareholders have been diluted in the past year



Snowflake Analysis

Reasonable growth potential with questionable track record.


Similar Companies

Share Price & News

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


Latest Share Price and Events

Stable Share Price: SWCH has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

7.6%

SWCH

2.1%

US IT

1.5%

US Market


1 Year Return

98.4%

SWCH

37.2%

US IT

20.1%

US Market

Return vs Industry: SWCH exceeded the US IT industry which returned 37.2% over the past year.

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


Shareholder returns

SWCHIndustryMarket
7 Day7.6%2.1%1.5%
30 Day8.5%4.4%1.4%
90 Day9.0%13.9%8.7%
1 Year100.2%98.4%38.6%37.2%22.7%20.1%
3 Yearn/a112.3%103.1%50.1%40.5%
5 Yearn/a148.0%125.8%73.1%54.1%

Price Volatility Vs. Market

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


Simply Wall St News

Valuation

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

181.35x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: SWCH ($17.4) is trading above our estimate of fair value ($9.71)

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


Price To Earnings Ratio

PE vs Industry: SWCH is poor value based on its PE Ratio (181.4x) compared to the IT industry average (33.1x).

PE vs Market: SWCH is poor value based on its PE Ratio (181.4x) compared to the US market (18.4x).


Price to Earnings Growth Ratio

PEG Ratio: SWCH is poor value based on its PEG Ratio (4.8x)


Price to Book Ratio

PB vs Industry: SWCH is overvalued based on its PB Ratio (7x) compared to the US IT industry average (4.3x).


Next Steps

Future Growth

How is Switch forecast to perform in the next 1 to 3 years based on estimates from 12 analysts?

38.1%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: SWCH's forecast earnings growth (38.1% per year) is above the savings rate (1.7%).

Earnings vs Market: SWCH's earnings (38.1% 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: SWCH's revenue (10.1% per year) is forecast to grow faster than the US market (7.6% per year).

High Growth Revenue: SWCH's revenue (10.1% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: SWCH's Return on Equity is forecast to be low in 3 years time (13.9%).


Next Steps

Past Performance

How has Switch performed over the past 5 years?

-70.0%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: SWCH has high quality earnings.

Growing Profit Margin: SWCH became profitable in the past.


Past Earnings Growth Analysis

Earnings Trend: SWCH's earnings have declined by -70% per year over the past 5 years.

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

Earnings vs Industry: SWCH has become profitable in the last year, making it difficult to compare its past year earnings growth to the IT industry (12%).


Return on Equity

High ROE: SWCH's Return on Equity (3.9%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Switch's financial position?


Financial Position Analysis

Short Term Liabilities: SWCH's short term assets ($80.6M) do not cover its short term liabilities ($105.1M).

Long Term Liabilities: SWCH's short term assets ($80.6M) do not cover its long term liabilities ($853.0M).


Debt to Equity History and Analysis

Debt Level: SWCH's debt to equity ratio (98.4%) is considered high.

Reducing Debt: Insufficient data to determine if SWCH's debt to equity ratio has reduced over the past 5 years.

Debt Coverage: SWCH's debt is well covered by operating cash flow (31.4%).

Interest Coverage: SWCH's interest payments on its debt are not well covered by EBIT (1.6x coverage).


Balance Sheet

Inventory Level: SWCH has a high level of physical assets or inventory.

Debt Coverage by Assets: SWCH's debt is not covered by short term assets (assets are 0.1x debt).


Next Steps

Dividend

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

0.67%

Current Dividend Yield


Dividend Yield vs Market

company0.7%marketbottom25%1.4%markettop25%3.7%industryaverage1.2%forecastin3Years0.9%

Current dividend yield vs market & industry

Notable Dividend: SWCH's dividend (0.68%) isn’t notable compared to the bottom 25% of dividend payers in the US market (1.44%).

High Dividend: SWCH's dividend (0.68%) is low compared to the top 25% of dividend payers in the US market (3.69%).


Stability and Growth of Payments

Stable Dividend: SWCH is not paying a notable dividend for the US market, therefore no need to check if payments are stable.

Growing Dividend: SWCH is not paying a notable dividend for the US market, therefore no need to check if payments are increasing.


Current Payout to Shareholders

Dividend Coverage: SWCH is not paying a notable dividend for the US market.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of SWCH'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?

2.7yrs

Average management tenure


CEO

Rob Roy (50yo)

2.7yrs

Tenure

US$8,242,618

Compensation

Mr. Rob Roy founded Switch, Inc. in June 13, 2017 and has been its Chief Executive Officer and Chairman since June 13, 2017. Mr. Roy has been Chief Executive Officer and as Chairman of the Board of Switch, ...


CEO Compensation Analysis

Compensation vs Market: Rob's total compensation ($USD8.24M) is above average for companies of similar size in the US market ($USD4.88M).

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


Leadership Team

NamePositionTenureCompensationOwnership
Rob Roy
Founder2.7yrsUS$8.24m0.94% $39.9m
Erin Morton
President2.7yrsUS$4.04m0.41% $17.2m
Gabriel Nacht
Chief Financial Officer2.7yrsUS$2.40m0.042% $1.8m
Eddie Shutter
Chief Technology Officer0yrsno datano data
Missy Young
Chief Information Officer0yrsno datano data
Matthew Heinz
Vice President of Investor Relations and Financial Planning & Analysis0yrsno datano data
David Glover
General Manager of EAST Campus0yrsno datano data
Brian Boles
Executive Vice President of Network Operations0yrsno datano data
Chris Donnelly
Chief Connectivity Officer0yrsno datano data
Joseph McDonald
Chief Security Officer0yrsno datano data

2.7yrs

Average Tenure

50yo

Average Age

Experienced Management: SWCH's management team is considered experienced (2.7 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Rob Roy
Founder2.7yrsUS$8.24m0.94% $39.9m
Donald Snyder
Lead Independent Director0yrsUS$313.04k0.15% $6.2m
Bryan Wolf
Non-Employee Director2.7yrsUS$82.50k0.018% $753.1k
Zareh Sarrafian
Non-Employee Director2.7yrsUS$284.01k0.035% $1.5m
Kimberly Sheehy
Independent Director2.2yrsUS$296.12k0.035% $1.5m
Thomas Thomas
Non-Employee Director2.7yrsUS$289.60k1.0% $42.3m

2.7yrs

Average Tenure

55yo

Average Age

Experienced Board: SWCH's board of directors are not considered experienced ( 2.7 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: SWCH insiders have only sold shares in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 30.2%.


Top Shareholders

Company Information

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


Key Information

  • Name: Switch, Inc.
  • Ticker: SWCH
  • Exchange: NYSE
  • Founded: 2000
  • Industry: Internet Services and Infrastructure
  • Sector: Software
  • Implied Market Cap: US$4.243b
  • Market Cap: US$1.562b
  • Shares outstanding: 243.82m
  • Website: https://www.switch.com

Number of Employees


Location

  • Switch, Inc.
  • 7135 South Decatur Boulevard
  • Las Vegas
  • Nevada
  • 89118
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
SWCHNYSE (New York Stock Exchange)YesClass A Common SharesUSUSDOct 2017
821DB (Deutsche Boerse AG)YesClass A Common SharesDEEUROct 2017

Biography

Switch, Inc., through its subsidiary, Switch, Ltd., provides colocation space and related services primarily to technology and digital media companies in the United States. It develops and operates data centers in Nevada and Michigan. The company also serves cloud and managed service providers, financial institutions, IT and software providers, government agencies, network and telecommunications providers, and others that conduct critical business on the Internet. Switch, Inc. was founded in 2000 and is headquartered in Las Vegas, Nevada. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/17 01:25
End of Day Share Price2020/02/14 00:00
Earnings2019/09/30
Annual Earnings2018/12/31


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.