Karooooo Ltd. (NASDAQ: KARO)

Sector: Technology Industry: Software - Application CIK: 0001828102
Market Cap 1.41 Bn
P/B 8.30
P/E 24.96
P/S 4.97
ROIC (Qtr) 526.65
Div Yield % 2.74
Rev 1y % (Qtr) 22.67
Total Debt (Qtr) 37.13 Mn
Debt/Equity (Qtr) 0.22

About

Karooooo Ltd., a global leader in real-time mobility data analytics solutions for smart transportation, operates under the ticker symbol KARO. The company's primary business activities revolve around the development and provision of a comprehensive smart mobility Software-as-a-Service (SaaS) platform for connected vehicles and other mobile assets. Karooooo's platform offers scalable mobile asset management and workforce optimization applications to cater to a diverse range of industries, including commercial fleets, logistics, public transportation,...

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Price action

Investment thesis

Bull case

  • Strong operating cash flow of 91.37M provides robust 2.46x coverage of total debt 37.13M, indicating excellent debt servicing capability and financial flexibility.
  • Strong tangible asset base of 264.52M provides 7.12x coverage of total debt 37.13M, indicating robust asset backing and low credit risk.
  • Operating cash flow of 91.37M provides exceptional 89.89x coverage of minority interest expenses 1.02M, showing strong core operations.
  • Operating cash flow of 91.37M provides exceptional 24.49x coverage of interest expenses 3.73M, showing strong debt service capability.
  • Tangible assets of 264.52M provide exceptional 9.38x coverage of deferred revenue 28.19M, showing strong service capability backing.

Bear case

  • Operating cash flow of 91.37M barely covers its investment activities of (64.42M), with a coverage ratio of -1.42, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of (64.42M) provide weak support for R&D spending of 13.55M, which is -4.75x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • High receivables of 36.63M relative to inventory of 278628.12 (131.48 ratio) suggests aggressive credit terms or collection difficulties, potentially masking revenue quality issues.
  • Operating cash flow of 91.37M barely covers operating expenses of (2.02M) with a -45.17 ratio, suggesting thin operational efficiency margins and limited flexibility.
  • High financing cash flow of (42.93M) relative to working capital of (16.34M), which is 2.63x suggests concerning dependence on external funding for operational needs.

Peer comparison

Companies in the Software - Application
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 SAP Sap Se 288.31 Bn 34.60 6.72 10.73 Bn
2 CRM Salesforce, Inc. 248.32 Bn 34.38 6.16 11.14 Bn
3 SHOP Shopify Inc. 212.27 Bn 119.19 19.85 1.12 Bn
4 INTU Intuit Inc. 180.73 Bn 43.89 9.30 6.78 Bn
5 UBER Uber Technologies, Inc 178.38 Bn 10.72 3.60 12.19 Bn
6 NOW ServiceNow, Inc. 146.98 Bn 84.91 11.60 2.40 Bn
7 ADBE Adobe Inc. 144.48 Bn 20.77 6.23 6.64 Bn
8 ADP Automatic Data Processing Inc 108.20 Bn 26.16 5.18 9.77 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets -0.46 2.65
EV to Cash from Ops. EV/CFO -1.40 13.37
EV to Debt EV to Debt -3.43 57.69
EV to EBIT EV/EBIT -1.62 19.12
EV to EBITDA EV/EBITDA -1.11 15.00
EV to Free Cash Flow [EV/FCF] EV/FCF -3.79 14.69
EV to Market Cap EV to Market Cap -0.09 -92.28
EV to Revenue EV/Rev -0.45 4.60
Price to Book Value [P/B] P/B 8.30 4.26
Price to Earnings [P/E] P/E 24.96 -136.90
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.00 -3.95
Dividend Payout Ratio % Div Payout % (Qtr) 68.40 4.25
Dividend per Basic Share Div per Share (Qtr) 1.25 0.15
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 6.50 2.52
Interest Coverage Int. cover (Qtr) 21.05 -52.32
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -17.72 -259.78
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -39.86 9,763.58
Dividend Growth (1y) % Div 1y % (Qtr) 15.74 1.61
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 22.70 -263.15
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 0.00 56.46
EBIT Growth (1y) % EBIT 1y % (Qtr) 17.98 -225.15
EBT Growth (1y) % EBT 1y % (Qtr) 15.10 -86.10
EPS Growth (1y) % EPS 1y % (Qtr) 19.80 123.84
FCF Growth (1y) % FCF 1y % (Qtr) -10.18 -36.82
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 19.39 95.08
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.06 0.58
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.02
Cash Ratio Cash Ratio (Qtr) 0.30 3.75
Current Ratio Curr Ratio (Qtr) 0.80 8.16
Debt to Equity Ratio Debt/Equity (Qtr) 0.22 0.17
Interest Cover Ratio Int Coverage (Qtr) 21.05 -52.32
Times Interest Earned Times Interest Earned (Qtr) 21.05 -52.32
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 0.00 -100.06
EBIT Margin % EBIT Margin % (Qtr) 488.81 -164.24
EBT Margin % EBT Margin % (Qtr) 26.39 -116.94
Gross Margin % Gross Margin % (Qtr) 69.30 58.20
Net Profit Margin % Net Margin % (Qtr) 19.90 -121.65