Endava plc (NYSE: DAVA)

Sector: Technology Industry: Software - Infrastructure CIK: 0001656081
Market Cap 439.95 Mn
P/B 0.57
P/E 30.12
P/S 0.43
ROIC (Qtr) 2.09
Div Yield % 0.00
Rev 1y % (Qtr) -6.18
Total Debt (Qtr) 327.42 Mn
Debt/Equity (Qtr) 0.43

About

Endava plc, a leading next-generation technology services provider, operates under the stock symbol DAVA and offers a range of technology services to various industries. The company's main business activities include providing product and technology strategies, intelligent digital experiences, and world-class engineering to a diverse group of clients spread across the United Kingdom, Europe, Latin America, North America, Asia-Pacific, and the Middle East. Endava generates revenue primarily through its digital strategies, engineering, and technology...

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Price action

Investment thesis

Bull case

  • Healthy cash reserves of 63.82M provide 3.34x coverage of short-term debt 19.09M, demonstrating strong liquidity position and minimal refinancing risk.
  • Retained earnings of 725.30M provide full 2.35x coverage of long-term debt 308.33M, indicating strong internal capital position.
  • Tangible assets of 473.66M provide robust 33.58x coverage of other current liabilities 14.11M, indicating strong asset backing.
  • Retained earnings of 725.30M provide strong 51.42x coverage of other current liabilities 14.11M, indicating earnings quality.
  • Operating cash flow of 81.96M fully covers other non-current liabilities 20.53M by 3.99x, showing strong long-term stability.

Bear case

  • Operating cash flow of 81.96M barely covers its investment activities of (20.24M), with a coverage ratio of -4.05, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Cash reserves of 63.82M provide limited coverage of acquisition spending of (13.85M), which is -4.61x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating cash flow of 81.96M is outpaced by equity issuance of (118.49M) (-0.69 ratio), indicating concerning reliance on equity markets for funding operations.
  • R&D investment of 0 represents just 0x of SG&A expenses of 214.60M, indicating potential underinvestment in innovation relative to administrative overhead.
  • Other non-current assets of 28.01M provide minimal coverage for long-term debt of 308.33M, which is 0.09x, indicating potential asset-liability mismatch.

Peer comparison

Companies in the Software - Infrastructure
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 MSFT Microsoft Corp 3,563.59 Bn 33.97 12.13 60.56 Bn
2 ORCL Oracle Corp 561.87 Bn 36.43 9.21 124.39 Bn
3 PLTR Palantir Technologies Inc. 413.65 Bn 377.64 106.17 0.24 Bn
4 PANW Palo Alto Networks Inc 126.45 Bn 113.19 13.23 0.35 Bn
5 CRWD CrowdStrike Holdings, Inc. 116.42 Bn -370.56 25.50 0.82 Bn
6 SNPS Synopsys Inc 86.06 Bn 64.60 12.20 14.29 Bn
7 NET Cloudflare, Inc. 62.78 Bn -609.27 31.18 3.50 Bn
8 FTNT Fortinet, Inc. 60.83 Bn 32.47 9.28 1.00 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.74 2.69
EV to Cash from Ops. EV/CFO 11.32 28.91
EV to Debt EV to Debt 2.83 19.83
EV to EBIT EV/EBIT 36.72 -9.95
EV to EBITDA EV/EBITDA 21.50 6.82
EV to Free Cash Flow [EV/FCF] EV/FCF 11.32 26.09
EV to Market Cap EV to Market Cap 2.11 0.36
EV to Revenue EV/Rev 0.91 -9.34
Price to Book Value [P/B] P/B 0.57 3.88
Price to Earnings [P/E] P/E 30.12 -10.66
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 -0.30
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 2.71
Dividend per Basic Share Div per Share (Qtr) 0.00 0.10
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 1.68
Interest Coverage Int. cover (Qtr) 2.57 -14.20
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex Growth (1y) % 0.00 -408.01
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -8.16 226.39
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 -0.28
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 133.16 25.27
EBITDA Growth (1y) % EBITDA Growth (1y) % 0.00 47.48
EBIT Growth (1y) % EBIT 1y % (Qtr) 24.39 20.13
EBT Growth (1y) % EBT 1y % (Qtr) -15.44 14.16
EPS Growth (1y) % EPS 1y % (Qtr) 34.30 67.50
FCF Growth (1y) % FCF 1y % (Qtr) 47.68 296.60
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 7.91 46.75
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 1.09 0.67
Cash Payout Ratio Cash Payout Ratio 0.00 0.01
Cash Ratio Cash Ratio (Qtr) 0.39 1.22
Current Ratio Curr Ratio (Qtr) 2.18 2.59
Debt to Equity Ratio Debt/Equity (Qtr) 0.43 -0.96
Interest Cover Ratio Int Coverage (Qtr) 2.57 -14.20
Times Interest Earned Times Interest Earned (Qtr) 2.57 -14.20
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % 0.00 -548.16
EBIT Margin % EBIT Margin % (Qtr) 1.83 -199.84
EBT Margin % EBT Margin % (Qtr) 1.51 -607.20
Gross Margin % Gross Margin % (Qtr) 24.20 51.88
Net Profit Margin % Net Margin % (Qtr) 1.40 -610.00