Alteryx Inc (AYX): A Deep Dive into Its Potential Performance Challenges
Long-established in the Software industry, Alteryx Inc (NYSE:AYX) has enjoyed a stellar reputation. It has recently witnessed a daily gain of 5.38%, juxtaposed with a three-month change of -19.89%. However, fresh insights from the GuruFocus Score Rating hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of Alteryx Inc.
Understanding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
Financial strength rank: 3/10
Profitability rank: 4/10
Growth rank: 7/10
GF Value rank: 4/10
Momentum rank: 3/10
Based on the above method, GuruFocus assigned Alteryx Inc the GF Score of 66 out of 100, which signals poor future outperformance potential.
Alteryx Inc: A Snapshot of Its Business
Alteryx Inc is a software company that provides self-service data analytics software. The company delivers easy end-to-end automation of data engineering, analytics, reporting, machine learning, and data science processes, enabling enterprises everywhere to democratize data analytics across their organizations for a broad range of use cases. The company generates its revenue from the sale of a subscription-based software platform. With a market cap of $2.61 billion and sales of $903.88 million, Alteryx Inc has an operating margin of -29.11%.
Financial Strength Breakdown
Alteryx Inc's financial strength indicators present some concerning insights about the company's balance sheet health. The company's interest coverage ratio of 0 positions it worse than 0% of 1582 companies in the Software industry. This ratio highlights potential challenges the company might face when handling its interest expenses on outstanding debt. The company's Altman Z-Score is just 0.77, which is below the distress zone of 1.81. This suggests that the company may face financial distress over the next few years. Additionally, the company's low cash-to-debt ratio at 0.54 indicates a struggle in handling existing debt levels. The company's debt-to-equity ratio is 24.79, which is worse than 99.43% of 2101 companies in the Software industry. A high debt-to-equity ratio suggests over-reliance on borrowing and vulnerability to market fluctuations.
Profitability Breakdown
Alteryx Inc's low Profitability rank can also raise warning signals. Alteryx Inc's Operating Margin has declined over the past five years ((-356.19%)), as shown by the following data: 2018: 11.74; 2019: 9.09; 2020: -0.79; 2021: -25.42; 2022: -30.08. Additionally, Alteryx Inc's Gross Margin has also declined over the past five years, as evidenced by the data: 2018: 91.01; 2019: 90.63; 2020: 91.15; 2021: 89.60; 2022: 86.23. This trend underscores the company's struggles to convert its revenue into profits.
Conclusion
Given Alteryx Inc's financial strength, profitability, and growth metrics, the GuruFocus Score Rating highlights the firm's unparalleled position for potential underperformance. While the company has a strong reputation in the software industry, its financial indicators suggest that it may face significant challenges in the future. Therefore, investors should exercise caution when considering this stock.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
This article first appeared on GuruFocus.
