ACI Worldwide Inc (NASDAQ:ACIW) Emerges as a Compelling Value Stock for Investors

For investors looking for chances where a company's market price may not completely show its basic business condition, a systematic filtering method can be a helpful first step. One way is to find stocks that join an interesting price assessment with good basic condition, earnings, and expansion. This way fits with main value investing ideas, which concentrate on finding securities trading for less than their real worth while making sure the basic business is financially stable and able to produce results. ACI Worldwide Inc (NASDAQ:ACIW) appears from such a filter, showing a picture that calls for more examination from investors focused on this method.

Valuation: An Interesting Starting Price

The main attraction of ACI Worldwide for a value-focused filter is its price assessment rating. Based on ChartMill's basic examination, ACIW gets a Valuation score of 7 out of 10, showing it is priced more appealingly than many similar companies. This score is important for value investing, as it hints at a possible safety gap, a cushion between the market price and the investor's calculation of real worth.

Important numbers backing this view include:

• Enterprise Value to EBITDA: The company is priced lower than 85% of its industry peers using this measure, which is often used to compare companies with different financial setups.
• Price to Free Cash Flow: ACIW's number is lower than almost 84% of the software industry, pointing out its skill to create cash compared to its market price.
• Forward P/E Context: While its forward P/E number of 17.46 might appear high alone, it is actually lower than 78% of the companies in its field and is under the present average for the S&P 500.

This mix hints the market may be using a lower price for ACIW compared to both its industry and the wider market, a basic requirement for a value investment idea.

Profitability: A Shown Ability

A low price alone can be a misleading signal if the company does not have earning ability. Thankfully, ACI Worldwide's most solid basic part is its earnings, where it scores an 8 out of 10. For a value investor, reliable and good-quality profits are necessary; they give proof of a lasting competitive edge and the skill to increase worth over time.

The company does well in several important earnings numbers:

• High Returns: Its Return on Equity (17.64%) and Return on Invested Capital (12.16%) both place in the top 15% of the software industry, showing effective use of investor money.
• Solid and Increasing Margins: ACIW has an operating margin of 20.83%, doing better than 87% of its peers, and this margin has been getting better. Its profit margin of 15.07% also rests easily above the industry middle point.
• History: The examination confirms ACIW has been profitable with positive operating cash flow in each of the last five years, showing financial steadiness.

This solid earnings picture helps lower the chance that a low price is just a sign of a weak business. Instead, it hints the company is basically in good condition and able to benefit shareholders.

Financial Condition: A Stable Base

Financial condition is the foundation that lets a company survive economic changes and spend for what comes next. ACI Worldwide gets a middle-level Condition score of 5. While not outstanding, the examination shows a mostly stable financial situation with some parts of ability and small points to note, a common picture for an established, financed software company.

Good signs include:

• Low Failure Risk: The Altman-Z score of 3.54 shows financial condition and small short-term chance of failure, doing better than 66% of the industry.
• Controlled Debt: The Debt to Free Cash Flow number of 3.02 is seen as acceptable, meaning it would need just over three years of present cash flow to pay all debt, which is better than 64% of peers.

A point to see is the company's Debt to Equity number of 0.56, which is higher than many industry rivals. While this shows use of debt financing, the solid cash flow creation and earnings give confidence that this financing is controlled instead of risky.

Growth: Consistent, Not Fast

Value investments do not need fast growth, but they do gain from a steady, maintainable path that can push future cash flows and real worth upward. ACIW's Growth rating of 5 shows this steady condition.

The company's growth picture is marked by:

• Solid Past EPS Growth: Earnings Per Share has increased at an average speed of 27.5% over recent years, a very solid showing.
• Moderate Sales Increase: Sales growth has been more measured, averaging 4.85% in the past and expected to continue around 5.6% each year.
• Good Forward EPS Predictions: Analysts think EPS will increase by about 15% per year moving forward.

This pattern hints at a company that has pushed important bottom-line effectiveness and is now set for steady, mid-single-digit top-line growth joined with continued profit increase, a reasonable mix for a value holding.

Conclusion: A Possibility for the Value List

ACI Worldwide Inc shows a clear case for investors using a "reasonable value" plan. It is not a very troubled asset, but a profitable, cash-creating business trading at a price lower than its industry. Its high returns on money and solid margins suggest quality, while its controlled debt and stable growth estimates lower basic risk. The match of an appealing price assessment (score of 7) with solid earnings (8) and acceptable condition and growth (both 5) makes ACIW a standard example of the kind of stock such a filter is made to find.

For a full and itemized look at all basic parts, you can check the complete ChartMill Fundamental Analysis Report for ACIW.

Focused on finding more stocks that match this "reasonable value" picture? You can use the same filter used to spot ACI Worldwide to find other possible chances. Click here to see the filter and view the present outcomes.

Disclaimer: This article is for information only and does not make up financial guidance, a suggestion, or an offer to buy or sell any security. The examination is based on data and ratings given by ChartMill. Investors should do their own complete study and think about their personal financial situation and risk comfort before making any investment choices.