NYSE:SWI

Stock Analysis Report

Executive Summary

SolarWinds Corporation provides information technology (IT) infrastructure management software products in the United States and internationally.

Rewards

Trading at 40.5% below its fair value

Earnings are forecast to grow 55.8% per year

Risk Analysis

Interest payments are not well covered by earnings

Shareholders have been substantially diluted in the past year

Large one-off items impacting financial results

Profit margins (2%) are lower than last year (43.8%)



Snowflake Analysis

Reasonable growth potential and fair value.


Similar Companies

Share Price & News

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


Latest Share Price and Events

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


Market Performance


7 Day Return

-0.4%

SWI

1.7%

US Software

1.5%

US Market


1 Year Return

-2.4%

SWI

42.3%

US Software

20.1%

US Market

Return vs Industry: SWI underperformed the US Software industry which returned 42.2% over the past year.

Return vs Market: SWI underperformed the US Market which returned 20.1% over the past year.


Shareholder returns

SWIIndustryMarket
7 Day-0.4%1.7%1.5%
30 Day-1.7%7.7%1.4%
90 Day-3.2%18.4%8.7%
1 Year-2.4%-2.4%43.9%42.3%22.7%20.1%
3 Yearn/a152.8%142.4%50.1%40.5%
5 Yearn/a224.7%201.5%73.1%54.1%

Price Volatility Vs. Market

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


Simply Wall St News

Valuation

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

40.5%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: SWI ($18.57) is trading below our estimate of fair value ($31.22)

Significantly Below Fair Value: SWI is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: SWI is poor value based on its PE Ratio (308.9x) compared to the Software industry average (52.1x).

PE vs Market: SWI is poor value based on its PE Ratio (308.9x) compared to the US market (18.4x).


Price to Earnings Growth Ratio

PEG Ratio: SWI is poor value based on its PEG Ratio (5.5x)


Price to Book Ratio

PB vs Industry: SWI is good value based on its PB Ratio (2.2x) compared to the US Software industry average (6x).


Next Steps

Future Growth

How is SolarWinds forecast to perform in the next 1 to 3 years based on estimates from 13 analysts?

55.8%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: SWI's forecast earnings growth (55.8% per year) is above the savings rate (1.7%).

Earnings vs Market: SWI's earnings (55.8% 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: SWI's revenue (10.5% per year) is forecast to grow faster than the US market (7.6% per year).

High Growth Revenue: SWI's revenue (10.5% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: SWI's Return on Equity is forecast to be low in 3 years time (12.9%).


Next Steps

Past Performance

How has SolarWinds performed over the past 5 years?

15.9%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: SWI has a large one-off loss of $14.1M impacting its December 31 2019 financial results.

Growing Profit Margin: SWI's current net profit margins (2%) are lower than last year (43.8%).


Past Earnings Growth Analysis

Earnings Trend: SWI's earnings have grown by 15.9% per year over the past 5 years.

Accelerating Growth: SWI's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: SWI had negative earnings growth (-94.9%) over the past year, making it difficult to compare to the Software industry average (17.1%).


Return on Equity

High ROE: SWI's Return on Equity (0.7%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is SolarWinds's financial position?


Financial Position Analysis

Short Term Liabilities: SWI's short term assets ($319.9M) do not cover its short term liabilities ($423.0M).

Long Term Liabilities: SWI's short term assets ($319.9M) do not cover its long term liabilities ($2.2B).


Debt to Equity History and Analysis

Debt Level: SWI's debt to equity ratio (72.2%) is considered high.

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

Debt Coverage: SWI's debt is not well covered by operating cash flow (15.7%).

Interest Coverage: SWI's interest payments on its debt are not well covered by EBIT (1.4x coverage).


Balance Sheet

Inventory Level: SWI has a low level of unsold assets or inventory.

Debt Coverage by Assets: SWI's debt is not covered by short term assets (assets are 0.2x debt).


Next Steps

Dividend

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


Dividend Yield vs Market

companyn/amarketbottom25%1.4%markettop25%3.7%industryaverage1.2%forecastin3Years0%

Current dividend yield vs market & industry

Notable Dividend: Unable to evaluate SWI's dividend yield against the bottom 25% of dividend payers, as the company has not reported any payouts.

High Dividend: Unable to evaluate SWI's dividend yield against the top 25% of dividend payers, as the company has not reported any payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if SWI's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if SWI's dividend payments have been increasing.


Current Payout to Shareholders

Dividend Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.


Future Payout to Shareholders

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

3.8yrs

Average management tenure


CEO

Kevin Thompson (54yo)

9.9yrs

Tenure

US$8,711,887

Compensation

Mr. Kevin B. Thompson has been the Chief Executive Officer and President of SolarWinds Corporation since March 01, 2010 and since January 2009 respectively. Mr. Thompson serves as the President and Chief E ...


CEO Compensation Analysis

Compensation vs Market: Kevin's total compensation ($USD8.71M) is above average for companies of similar size in the US market ($USD6.26M).

Compensation vs Earnings: Kevin's compensation has increased by more than 20% whilst company earnings have fallen more than 20% in the past year.


Leadership Team

NamePositionTenureCompensationOwnership
Kevin Thompson
President9.9yrsUS$8.71m0.91% $52.3m
J. Kalsu
Executive VP3.8yrsUS$2.93m0.19% $11.0m
David Gardiner
Executive Vice President of Core IT6.6yrsUS$3.48m0.18% $10.2m
Douglas Hibberd
Executive VP & President of Business Operations6yrsUS$3.39mno data
Woong Kim
Executive VP of Engineering & CTO4yrsno data0.10% $6.0m
Rani Johnson
Chief Information Officer & Global VP2.8yrsno datano data
David Hafner
Vice President of Investor Relations0yrsno datano data
Jason Bliss
Executive VP3.8yrsno data0.12% $6.7m
Darren Beck
Senior VP & Chief Marketing Officer2.1yrsno datano data
David Cronk
Senior Vice President of International Sales2.1yrsno datano data

3.8yrs

Average Tenure

48yo

Average Age

Experienced Management: SWI's management team is considered experienced (3.8 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Kevin Thompson
President9.9yrsUS$8.71m0.91% $52.3m
Michael Bingle
Independent Director4yrsUS$471.20kno data
Kenneth Hao
Independent Director4yrsUS$471.96kno data
Paul Cormier
Independent Director1.3yrsUS$471.20kno data
Seth Boro
Independent Director4yrsUS$471.96kno data
William Bock
Independent Director1.3yrsUS$478.84kno data
Catherine Kinney
Lead Independent Director1.3yrsUS$476.29kno data
James Lines
Independent Director4yrsUS$572.73k0.018% $1.0m
Michael Hoffmann
Independent Director1.3yrsUS$470.18kno data
Jason White
Independent Director4yrsUS$472.73kno data

4.0yrs

Average Tenure

54yo

Average Age

Experienced Board: SWI's board of directors are considered experienced (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.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have been substantially diluted in the past year, with total shares outstanding growing by 118.7%.


Top Shareholders

Company Information

SolarWinds Corporation's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: SolarWinds Corporation
  • Ticker: SWI
  • Exchange: NYSE
  • Founded: 1999
  • Industry: Systems Software
  • Sector: Software
  • Market Cap: US$5.725b
  • Shares outstanding: 308.29m
  • Website: https://www.solarwinds.com

Number of Employees


Location

  • SolarWinds Corporation
  • Building 400
  • 7171 Southwest Parkway
  • Austin
  • Texas
  • 78735
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
SWINYSE (New York Stock Exchange)YesNew Common StockUSUSDOct 2018
0OIDB (Deutsche Boerse AG)YesNew Common StockDEEUROct 2018

Biography

SolarWinds Corporation provides information technology (IT) infrastructure management software products in the United States and internationally. It offers products to monitor and manage network, system, desktop, application, storage, and database and Website infrastructures, whether on-premise, in the public or private cloud, or in a hybrid IT infrastructure. The company provides a suite of network management software that provides real-time visibility into network utilization and bandwidth, as well as the ability to detect, diagnose, and resolve network performance problems; and a suite of system management products, which monitor and analyze the performance of applications and their supporting infrastructure. It also offers cloud-based monitoring of the full IT stack whether deployed in the cloud or on-premise; and AppOptics, which integrates application performance, server infrastructure monitoring, and custom metrics into one unified cloud-based solution. Its cloud management products enable visibility into log data, cloud infrastructure metrics, applications, tracing, and Web performance management. In addition, the company provides IT service management solutions to enable managed service providers (MSPs) to deliver outsourced IT services and manage their own businesses. Its remote monitoring and management software, which monitors desktops, laptops, servers, and mobile devices across operating systems and platforms. Further, it offers an email protection and archiving platform on a standalone basis that protects businesses from phishing, malware, and other email-borne threats. The company markets and sells its products directly to network and systems engineers, database administrators, storage administrators, DevOps professionals, and managed service providers. The company was formerly known as SolarWinds Parent, Inc. and changed its name to SolarWinds Corporation in May 2018. SolarWinds Corporation was founded in 1999 and is headquartered in Austin, Texas. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/17 01:39
End of Day Share Price2020/02/14 00:00
Earnings2019/12/31
Annual Earnings2019/12/31


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.