Endava PLC (NYSE:DAVA) recently experienced a daily gain of 3.88% and a 3-month gain of -8.58%. With an Earnings Per Share (EPS) of 2.03, the question arises: is the stock significantly undervalued? This article aims to provide a detailed valuation analysis of Endava PLC.
Endava PLC is a renowned provider of technology solutions. The company offers an array of services including Agile Transformation, Digital Evolution, Automation, Test Automation, Engineering, Cloud, Architecture, Software Engineering, and more. These services cater to various industries like Finance, Retail and Consumer Goods, Telecommunication, Media, Technology, Insurance, and Healthcare.
Endava PLC’s current stock price is $52.98, with a market cap of $3 billion. However, the estimation of fair value stands at $144.15, hinting at a significant undervaluation of the stock.
The GF Value is a unique measure that represents the current intrinsic value of a stock. The calculation of GF Value is based on historical multiples at which the stock has traded, a GuruFocus adjustment factor based on the company’s past performance and growth, and future estimates of business performance. Currently, Endava PLC’s stock is believed to be significantly undervalued, implying that the long-term return of its stock is likely to be much higher than its business growth.
Financial Strength is an important factor to consider before purchasing shares. Key indicators of financial strength include the cash-to-debt ratio and interest coverage. Endava PLC has a cash-to-debt ratio of 3.11, indicating strong financial health.
Profitability and Growth are also crucial factors in the valuation of a company. Endava PLC has been profitable for the past 10 years, with a 3-year average annual revenue growth of 28% and a 3-year average EBITDA growth rate of 47.6%. The company’s profitability is strong, ranking 8 out of 10.
Another method of determining profitability is by comparing the return on invested capital (ROIC) to the weighted average cost of capital (WACC). Endava PLC’s ROIC is 23.37, higher than its cost of capital of 11.23, indicating value creation for shareholders.
In conclusion, Endava PLC stock appears to be significantly undervalued. The company has strong financials, robust profitability, and impressive growth. Potential investors should consider this hidden gem for above-average returns.