Endava PLC (DAVA, Financial), a prominent player in the software industry, has experienced a notable stock price increase of 16.18% over the past three months, despite a recent weekly dip of 5.45%. This surge in stock price is particularly significant when considering the company's valuation metrics. According to the GF Value, which is currently pegged at $88.36, Endava is significantly undervalued. This valuation has remained consistent over the past quarter, with a previous GF Value of $83.63, suggesting a strong investment potential.
Overview of Endava PLC
Founded in 2006 and headquartered in the U.K., Endava specializes in digital transformation and software development, catering primarily to the U.K. and European markets. The company's expertise spans across various sectors, including payments, financial services, technology, media, and telecom industries, positioning it as a key facilitator in the tech-driven corporate landscape.
Assessing Endava's Profitability
Endava boasts a Profitability Rank of 8 out of 10, indicating robust profitability relative to its peers. The company's Operating Margin stands at 5.75%, which is superior to 57.29% of 2,772 companies in the software industry. Additionally, its Return on Equity (ROE) and Return on Assets (ROA) are 7.14% and 5.44% respectively, both metrics outperforming a significant portion of their industry counterparts. The Return on Invested Capital (ROIC) at 6.83% further underscores Endava's efficient use of capital.
Growth Metrics and Future Prospects
Endava is not just profitable but also exhibits exceptional growth, with a Growth Rank of 10 out of 10. The company's 3-Year Revenue Growth Rate per Share is an impressive 30.20%, and its 5-Year Rate is 25.70%. These figures are significantly higher than the majority of their industry peers. Furthermore, the 3-Year EPS without NRI Growth Rate stands at a staggering 90.00%, reflecting strong earnings growth, which is a positive indicator for potential investors.
Significant Shareholders
Endava's stock is held by notable investors, including Ron Baron (Trades, Portfolio), who owns 1,861,634 shares, representing 3.22% of the company. Other significant holders include Wasatch International Growth (Trades, Portfolio) and Steven Cohen (Trades, Portfolio), holding 0.19% and 0.11% of the shares, respectively. These investments by high-profile investors could be seen as a vote of confidence in Endava's market strategy and future prospects.
Competitive Landscape
Endava operates in a competitive environment with key players like Appian Corp (APPN, Financial), Rapid7 Inc (RPD, Financial), and Marqeta Inc (MQ, Financial), which have market caps of $2.28 billion, $2.27 billion, and $2.57 billion respectively. Despite the stiff competition, Endava's strong growth and profitability metrics help it maintain a competitive edge in the software industry.
Conclusion
Despite the recent price dip, Endava's stock performance over the past quarter coupled with its strong growth and profitability metrics suggest that the company has robust fundamentals. The significant undervaluation as per GF Value also indicates potential for future appreciation. With its strategic positioning in the software industry and solid market performance, Endava appears well-equipped to sustain its growth trajectory and continue delivering value to its shareholders.
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.
