The major stock indexes rallied last week, and today’s index futures indicate bullish investor sentiment. A solid start to the third-quarter earnings season is the key catalyst. The market also received support from news that initial jobless claims fell below 300,000 for the first time since the pandemic.
Though the inflationary environment and supply chain constraints remain concerns, continuing low interest rates and solid corporate earnings should keep supporting the market’s momentum in the near term.
Therefore, we think it could be wise to bet on quality stocks SS&C Technologies Holdings, Inc. (SSNC), Amdocs Limited (DOX), Criteo S.A. (CRTO), and EchoStar Corporation (SATS). They all look undervalued at their current price levels.
SS&C Technologies Holdings, Inc. (SSNC)
SSNC is a hedge fund, private equity administrator, and mutual fund transfer agency that is based in Windsor, Conn. The company owns and operates securities accounting, front-to-back-office operations, regulatory reporting, and healthcare information processes. Its products and services also allow professionals in the financial services and healthcare industries to automate complex business processes.
This month, SSNC was selected as administrator and technology partner by Mammoth Scientific, a health science and technology venture capital firm, for its inaugural $100 million fund. SSNC’s private-markets offerings should enable start-ups like Mammoth to market and facilitate integrated operations quickly through this collaboration.
SSNC’s total revenues for the second quarter, ended June 30, 2021, increased 10.6% year-over-year to $1.26 billion. The company’s gross profit grew 16.4% from its year-ago value to $595 million. Its operating income rose 29.7% from the prior-year quarter to $312.9 million. And the company’s net income increased 12% year-over-year to $189.8 million.
Analysts expect SSNC’s revenue to increase 6.3% year-over-year to $4.97 billion in its fiscal year 2021. The company has an impressive earnings surprise history; it beat the consensus EPS estimates in each of the trailing four quarters. In addition, its EPS is expected to increase 11.9% in the current year.
In terms of forward EV/Sales, SSNC is currently trading at 4.97x, which is 18.9% lower than the 4.18x industry average. In addition, its 15.12x forward non-GAAP P/E is 38.8% lower than the 24.7x industry average. SSNC’s stock price has surged 9.6% over the past nine months and 12.7% over the past year.
SSNC’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
Also, the stock has a B grade for Value, Sentiment, and Quality. We’ve also graded SSNC for Growth, Stability, and Momentum. Click here to access all SSNC’s ratings. SSNC is ranked #3 of 60 stocks in the Software – Business industry.
Click here to check out our Software Industry Report for 2021
Amdocs Limited (DOX)
DOX is a software services provider that provides solutions to the communications, PayTV, entertainment, and media industry. The company's services include managed services, digital business operations, quality engineering services, cloud services, consulting services, and integration services. DOX is headquartered in Saint Peter Port, the Channel Islands.
Last month, DOX was selected to provide business support systems by Orange for Europe’s first 5G Stand Alone (SA) experimental cloud network. Using its agility, scalability, and cloud-native automation platform, DOX intends to create a true cloud-native business supporting system that supports Orange's future-looking 5G use cases.
During its fiscal third quarter, ended June 30, 2021, DOX’s revenue increased 3.9% year-over-year to $1.07 billion. The company’s operating income grew 5% from its year-ago value to $154.92 million. Its net income rose 21.4% from the prior-year quarter to $146.15 million. Also, the company’s EPS increased 26.7% year-over-year to $1.14.
DOX’s revenue is expected to increase 4.6% year-over-year to $3.88 billion in its fiscal year 2022. In addition, the company has an impressive earnings surprise history; it beat the consensus EPS estimates in three of the trailing four quarters. Moreover, its EPS is expected to increase by 8.2% next year.
In terms of forward EV/Sales, DOX is currently trading at 2.35x, which is 43.7% lower than the 4.18x industry average. Also, in terms of its forward Price/Book, the stock is currently trading at 2.77x, which is 54.5% lower than the 6.10x industry average. DOX’s stock price has surged 14.3% over the past nine months and 36.9% over the past year.
DOX’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our proprietary rating system. Also, the stock has a B grade for Momentum, Quality, and Value.
In addition to the POWR Rating grades I’ve just highlighted, one can see DOX’s ratings for Stability, Sentiment, and Growth here. DOX is ranked #4 in the Software – Business industry.
Recently the Reitmeister Total Return Portfolio (RTR) closed a winning trade in DOX for a 25% gain. Learn more about the RTR service here.
Criteo S.A. (CRTO)
Headquartered in Paris, France, CRTO is a specialized digital performance marketing company that provides marketing and monetization services on the open Internet. The company’s solution consists of the Criteo Engine, data assets, access to inventory, and its advertiser and publisher platforms. It serves companies in digital retail, travel, and classifieds industries.
CRTO’s net income increased 144.4% year-over-year to $15.03 million for the second quarter, ended June 30, 2021. The company’s cash and cash equivalents grew marginally for the six months ended June 30, 2021, to $489.52 million. Its revenue rose 26% from the prior-year quarter to $551.31 million. Also, the company’s gross profit increased 25.3% year-over-year to $182.87 million.
For the fiscal year 2021, analysts expect CRTO’s revenue to increase 9.3% year-over-year to $901.77 million. It has surpassed the consensus EPS estimates in each of the trailing four quarters. In addition, the company’s EPS is estimated to increase 15.7% in the current year.
In terms of forward EV/Sales, CRTO is currently trading at 2.11x, which is 19.1% lower than the 2.61x industry average. In addition, its 6.5x forward EV/EBITDA is 34.6% lower than the 9.94x industry average. CRTO’s stock price has surged 95.8% over the past nine months and 207.5% over the past year.
It’s no surprise that CRTO has an overall B rating, which equates to a Buy in our POWR Rating system. Also, the stock has an A grade for Growth, and a B grade for Momentum and Quality.
Click here to see the additional POWR Ratings for CRTO (Value, Stability, and Sentiment). Within the Internet – Services industry, CRTO is ranked #4 of 38 stocks.
EchoStar Corporation (SATS)
Incorporated in 2007, SATS is a global provider of satellite communication solutions. The Englewood, Colo., company operates through two segments: Hughes and EchoStar Satellite Services (ESS). In addition, it delivers network technologies, managed services, and communications solutions for enterprise customers, which include aeronautical and government enterprises.
This month, the National Company for Telecommunications Services (NCTS) selected one of SATS’ segments, Hughes JUPITER system, to provide the ground segment for the Ka-band TIBA-1 satellite's operation. Hughes JUPITER System is a critical ingredient in a resilient, reliable broadband network that will help power social and economic development across Egypt.
For the second quarter, ended June 30, 2021, SATS’ total revenue increased 8.8% year-over-year to $499.83 million. The company’s net income came in at $35.02 million, compared to a $14.84 million net loss in the second quarter of 2020. Its total adjusted EBITDA grew 16% from its year-ago value to $186.69 million. The company’s cash and cash equivalents were $716.52 million for the six months ended June 30, 2021.
Analysts expect SATS’ revenue for its fiscal year 2021 to be $1.97 billion, representing 4.5% year-over-year growth. The company has an impressive earnings surprise history; it beat the consensus EPS estimates in each of the trailing four quarters. Also, its EPS is expected to increase 517.1% in the current year and 2,800% in the next quarter.
In terms of forward EV/Sales, SATS is currently trading at 1.22x, which is 53.2% lower than the 2.61x industry average. Also, in terms of its forward EV/EBITDA, the stock is currently trading at 3.48x, which is 64.9% lower than the 9.94x industry average. SATS’ stock price has surged 10.8% over the past three months and 16.8% over year-to-date.
SATS’ strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to a Buy in our POWR Rating system. Also, the stock has a B grade for Growth, Value, and Quality.
We’ve also graded SATS for Momentum, Stability, and Sentiment. Click here to access all of SATS’ ratings. In the B-rated Technology – Electronics industry, SATS is ranked #8 of 45 stocks.
SSNC shares were trading at $73.45 per share on Tuesday morning, up $0.72 (+0.99%). Year-to-date, SSNC has gained 1.64%, versus a 21.50% rise in the benchmark S&P 500 index during the same period.
About the Author: Priyanka Mandal
Priyanka is a passionate investment analyst and financial journalist. After earning a master's degree in economics, her interest in financial markets motivated her to begin her career in investment research.4 Undervalued Stocks to Buy Before They Take Off appeared first on StockNews.com