Unveiling Agilysys (AGYS)'s Value: Is It Really Priced Right? A Comprehensive Guide
Agilysys Inc (NASDAQ:AGYS) recently recorded a daily gain of 21.08% and a 3-month gain of 12.31%. With an Earnings Per Share (EPS) of 0.43, it raises the question: Is the stock modestly overvalued? This article presents a comprehensive valuation analysis of Agilysys (NASDAQ:AGYS) to answer this question. We invite you to read on and explore the intrinsic value of this stock.
Company Introduction
Agilysys Inc is a technology solutions provider specializing in industry-specific solutions to manage businesses. It offers solutions for property management, point-of-sale, dining reservations, inventory and procurement, analytics, labor management, self-service, and document management. The company serves sectors like gaming, hotels, resorts and cruise, corporate foodservice management, restaurants, universities, stadiums, and healthcare. Agilysys operates in North America, Europe, the Middle East, Asia-Pacific, and India. The majority of its revenues come from contract support, maintenance, and subscription services.
Understanding the GF Value
The GF Value is a unique measure of a stock's intrinsic value, calculated based on historical multiples, a GuruFocus adjustment factor, and future business performance estimates. The GF Value Line on our summary page provides an overview of the fair value at which the stock should ideally trade. If the stock price significantly deviates from the GF Value Line, it indicates that the stock may be overvalued or undervalued, impacting its future returns.
According to our analysis, Agilysys (NASDAQ:AGYS) appears to be modestly overvalued. The stock's current price of $77.37 per share is higher than our GF Value of $66.25, indicating that the stock may be overpriced. As Agilysys is relatively overvalued, the long-term return of its stock is likely to be lower than its business growth.
Assessing Financial Strength
Investing in companies with poor financial strength carries a higher risk of permanent capital loss. Therefore, it's crucial to carefully review a company's financial strength before purchasing its stock. Agilysys has a cash-to-debt ratio of 3.7, which is better than 54.57% of companies in the Software industry. GuruFocus ranks Agilysys's overall financial strength at 9 out of 10, indicating strong financial health.
Profitability and Growth
Consistent profitability over the long term reduces the risk for investors. Agilysys has been profitable 3 times over the past 10 years. Over the past twelve months, the company had a revenue of $206.60 million and Earnings Per Share (EPS) of $0.43. Its operating margin is 5.4%, ranking better than 57.13% of companies in the Software industry. However, the overall profitability of Agilysys is ranked 4 out of 10, indicating poor profitability.
Growth is a significant factor in a company's valuation. The 3-year average annual revenue growth rate of Agilysys is 3.4%, which ranks worse than 62.46% of companies in the Software industry. The 3-year average EBITDA growth rate is 0%, which ranks worse than 0% of companies in the Software industry.
ROIC vs WACC
Comparing a company's return on invested capital (ROIC) to its weighted cost of capital (WACC) is another way to evaluate its profitability. If the ROIC is higher than the WACC, it indicates that the company is creating value for shareholders. Over the past 12 months, Agilysys's ROIC was 7.4, while its WACC came in at 7.18.
Conclusion
Overall, Agilysys (NASDAQ:AGYS) stock appears to be modestly overvalued. The company's financial condition is strong, but its profitability is poor. Its growth ranks worse than 0% of 1990 companies in the Software industry. To learn more about Agilysys stock, you can check out its 30-Year Financials here.
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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.
This article first appeared on GuruFocus.
