Hi there,
We've been asked a few time about Absolute Software. It is a solid tech company and one that is certainly worth considering. In terms of pros and cons:
Pros
- After years of missed estimates, it has beat on earnings in 9 of the past 12 quarters - signs of turning things around.
- Revenue is almost entirely subscription based and is highly predictable with 80-90% of a typical year’s billings through contract renewals and expansions
- Customer base is ~70% Enterprise and Government - 31% of which is Education. Defensive industries which are more and more reliant on tech.
- Pays a dividend - not many tech companies pay a dividend.
Cons
- Trading a high valuations: 44 times forward earnings - true the entire industry is soaring, but ABT's expected growth rates don't justify current valuations
- Speaking of growth rates - EPS and Revenue is expected to grow at a mid-to-high single digit clip over the next few years. This is at the low wend of industry averages.
- Although recent performance has been positive, historical track record of execution has been spotty.
Mat