Model N Inc (MODN, Financial) has recently caught the attention of investors with its notable stock performance. The company's market capitalization stands at $1.17 billion, with the current stock price at $29.85. Over the past week, the stock has experienced an 8.28% gain, while the past three months have seen an 11.88% increase. When compared to the GF Value of $35.52, Model N Inc is considered modestly undervalued, a consistent valuation from three months prior when the GF Value was $36.41. This suggests that the stock may still have room to grow to reach its intrinsic value as defined by GuruFocus.com.
Understanding Model N Inc's Business
Model N Inc operates within the software industry, specializing in cloud revenue management solutions for life science and technology companies. Its products are designed to enhance revenue and operational efficiency while ensuring compliance with government regulations. The company's focus on revenue lifecycle management has positioned it as a key player in its sector, primarily serving clients in the United States but maintaining a global presence. With the increasing demand for cloud-based solutions, Model N's offerings are more relevant than ever.
Profitability Analysis
Despite the positive stock performance, Model N's Profitability Rank is relatively low at 3/10. The company's operating margin is currently at -1.28%, which is better than 39.98% of companies in the industry. Its Return on Equity (ROE) stands at -28.89%, surpassing 20.37% of its peers, while the Return on Assets (ROA) is -6.69%, higher than 32.9% of competitors. The Return on Invested Capital (ROIC) is -1.77%, which is more favorable than 40.2% of other companies. These figures indicate that while Model N is not the most profitable in its sector, it does hold a competitive edge over a significant portion of its industry counterparts.
Growth Prospects
Model N Inc's Growth Rank is impressive at 8/10. The company has demonstrated a solid 3-Year Revenue Growth Rate per Share of 11.40%, outperforming 56.8% of companies. Over a 5-year period, the revenue growth rate per share is 6.90%, which is better than nearly half of the industry. Looking ahead, the estimated Total Revenue Growth Rate for the next 3 to 5 years is 8.13%, which is more favorable than 42.41% of companies. These growth metrics suggest that Model N is on a strong upward trajectory, with potential for continued expansion.
Key Shareholders
Notable investors in Model N include Jim Simons (Trades, Portfolio), holding 778,926 shares, which translates to a 2% stake in the company. Another significant holder is Chuck Royce (Trades, Portfolio), with 25,000 shares, representing a 0.06% share percentage. The involvement of these prominent investors could signal confidence in the company's future performance and may influence other investors' perceptions of the stock.
Competitive Landscape
When compared to its competitors, Model N Inc holds its own within the software industry. Adeia Inc (ADEA, Financial) has a similar market cap of $1.17 billion, while E2open Parent Holdings Inc (ETWO, Financial) is slightly larger at $1.33 billion. Olo Inc (OLO, Financial) has a smaller market cap of $844.289 million. These comparisons provide context for Model N's market position and suggest that it is competitively placed among its peers.
Conclusion
In conclusion, Model N Inc's recent stock price surge can be attributed to its modest undervaluation relative to the GF Value, solid growth prospects, and the backing of significant shareholders. While the company's profitability metrics may not be leading the industry, its competitive operating margins and growth rates indicate potential for future gains. Investors should consider the company's market position and performance potential in comparison to its competitors, as well as the influence of key holders, when evaluating Model N as an investment opportunity.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
