TeradataTDC34,87 $
Today we have an idea at the intersection of conservatism and speculation: take shares in software and IT services provider Teradata (NYSE: TDC), to capitalize on the undervaluation of this company.
Growth potential and validity: 24% behind 19 Months; 71,5% behind 4 of the year; 14% per year for 9 years.
Why stocks can go up: because they are criminally underrated.
How do we act: we take shares now by 34,30 $.
When creating the material, sources were used, inaccessible to users from the Russian Federation. We hope, Do you know, what to do.
No guarantees
Our reflections are based on the analysis of the company's business and the personal experience of our investors, but remember: not a fact, that the investment idea will work like this, as we expect. Everything, what we write, are forecasts and hypotheses, not a call to action. To rely on our reflections or not – it's up to you.
And what is there with the author's forecasts
Research, like this and this, talk about, that the accuracy of target price predictions is low. And that's ok: there are always too many surprises on the stock exchange and accurate forecasts are rarely realized. If the situation were reversed, then funds based on computer algorithms would show results better than people, but alas, they work worse.
So we're not trying to build complex models.. The profitability forecast in the article is the author's expectations. We specify this forecast for the landmark. As with the investment idea in general, readers decide for themselves, it is worth trusting the author and focusing on the forecast or not.
We love, appreciate,
Investment editorial office
What the company makes money on
Teradata makes cloud-based enterprise data analytics software with customers from a wide range of industries.
Last year we published a successful idea for this company and described in detail its business, so we won't repeat ourselves here.. Here's what's important: most of the company's revenue is renewable - in the form of subscriptions or renewable service contracts.
Arguments in favor of the company
Fell down. The company's shares have fallen sharply this year.: with 58 to 34,30 $. The main reason for the fall was quarterly results and the forecast is slightly worse than expected. Ukrainian events also influenced: the company left the Russian Federation and at once lost $60 million in revenue in this market. News, certainly, unpleasant, but not fatal to Teradata.
It seems to me, investor panic is not entirely justified and we can count on a rebound in these shares.
Relevant. The company's solutions are super relevant in our time, when the corporate sector is looking for an answer to the problem of increasing productivity at a time of rising costs.
Cheap. The company is cheap, especially against the background of IT colleagues: its capitalization is 3.6 billion dollars, P / S — 1,9 and P / E — 29,5.
Can buy. Teradata's business is profitable and quite stable - don't forget most of the revenue is in the form of projected revolving revenues. It seems to me, it may well be bought by some large technology company, especially in light of the strong fall in Teradata quotes.
What can get in the way
Hotels. Whatever analysts' attempts to draw reporting numbers from the future look like, in which, in their opinion, the company must comply, investors, Unfortunately, take all this information to heart. That's why, when a company does not fit into these out-of-the-box forecasts, stocks can suffer.
Teradata earnings per share in dollars
| 2к2021 | 3к2021 | 4к2021 | 1к2022 | 2к2022 | |
|---|---|---|---|---|---|
| Current | 0,74 | 0,43 | 0,57 | 0,65 | — |
| Forecast | 0,48 | 0,33 | 0,27 | 0,63 | 0,29 |
Teradata revenue figures, million dollars
| 2к2021 | 3к2021 | 4к2021 | 1к2022 | 2к2022 | |
|---|---|---|---|---|---|
| Current | 491 | 460 | 475 | 496 | — |
| Forecast | 472,96 | 455,45 | 477,46 | 488,99 | 441,48 |
Accounting. The company has a lot of debt - almost 1.658 billion, of which 993 million must be repaid within a year. There is not much money at Teradata's disposal: there are 404 million in accounts and 30 million debts of counterparties.
Such a large debt may scare away some investors from the company due to higher interest rates and higher cost of servicing loans.. However, the company's debt is gradually decreasing. The relatively high level of debt is offset by the, that Teradata is profitable - unlike most colleagues in the shop.
What's the bottom line?
You can buy shares now 34,30 $. And then there are the following options for the development of events.:
- wait for stocks to return to level 42 $. Here it is better to rely on 19 Months;
- hold until the stock returns to the level 58 $. Here you should be prepared to wait for the next 4 of the year;
- if last time you took stocks with an eye on the long term, you can buy now after the drawdown.
