Agilysys, Inc. (NASDAQGS:AGYS) is currently trading at $26.15, at approximately 70.4% of its 52-week high of $37.17. With the stock price up 6.0% in the last year, investors are worried that the company is getting too expensive. So, is Agilysys, Inc. overvalued? In this article, we’ll discuss Agilysys, Inc.’s valuation using different valuation models.
One of the quickest ways to spot if a company is getting too expensive is to compare the current valuation to its historical one. We can use the price to sales ratio to cut the noise and avoid the volatility of the company’s earnings.
Considering Agilysys, Inc.’s latest twelve months revenue/share of $6.45 and using the company’s 5-year average price to sales of 2.61x as a benchmark, we have a fair value of $16.87, which is -35.5% lower than the current price.
With no surprise, we can see that Agilysys, Inc.’s price to sales of 4.1x is much higher than its 5-year average of 2.6x, indicating that the company is probably trading in overbought territory. We can easily visualize trends in the company’s fundamentals using the Finbox chart editor, as depicted below.
Absolute Valuation: Agilysys, Inc. DCF Analysis
Using a company’s historical valuation as a benchmark could lead to misleading results if a change in its fundamentals justifies the current valuation. So it’s always preferable to take into account the latest financial forecast and analyze the company with an absolute valuation model.
So, let’s analyze Agilysys, Inc. with a 5Y DCF analysis (EBITDA exit method). Using the latest 5Y revenue forecast CAGR of 10.1%, an average EBITDA margin forecast of 13.2%, a discount rate of 11.0%, and a terminal EBITDA multiple of 15.4x, we get a fair value of $22.5.
So, Is Agilysys, Inc. Overvalued?
Relying only on one or two financial models to determine a company’s fair value is never a good idea. It’s always preferable to use different models before coming to hasty conclusions.
The Finbox Fair Value Estimate is an advanced financial modeling technology that uses eleven different models to estimate the fair value of a stock and lets you get a company’s fair value at your fingertips. All the models are based on the same data utilized by the biggest investment banks and money managers in the world.
According to the estimate, Agilysys, Inc.’s fair value is $20.24, representing a -22.6% downside from the current price. Below are the fair value estimates for each model.
Company’s Profile: Agilysys, Inc.
Agilysys, Inc., together with its subsidiaries, operates as a developer and marketer of hardware and software products and services to the hospitality industry in North America, Europe, the Asia-Pacific, and India.
The company offers point of sale, property management systems, payment, inventory and procurement, reservations, table management, activity scheduling, document management, and analytics and marketing loyalty solutions to enhance guest experience.
It also provides technical software support, maintenance, and subscription services; and professional services. Agilysys, Inc. offers its solutions for gaming, hotels, resorts and cruise, corporate foodservice management, restaurants, universities, stadia, and healthcare.
The company was formerly known as Pioneer-Standard Electronics, Inc. and changed its name to Agilysys, Inc. in 2003. Agilysys, Inc. was founded in 1963 and is headquartered in Alpharetta, Georgia.- VIEW LESS