Q2 HOLDINGS INC (QTWO) Stock Fundamental Analysis
NYSE:QTWO - New York Stock Exchange, Inc. - US74736L1098 - Common Stock - Currency: USD
Taking everything into account, QTWO scores 4 out of 10 in our fundamental rating. QTWO was compared to 284 industry peers in the Software industry. While QTWO seems to be doing ok healthwise, there are quite some concerns on its profitability. QTWO shows excellent growth, but is valued quite expensive already.
1. Profitability
1.1 Basic Checks
In the past year QTWO was profitable.
In the past year QTWO had a positive cash flow from operations.
QTWO had negative earnings in each of the past 5 years.
Of the past 5 years QTWO 4 years had a positive operating cash flow.
1.2 Ratios
Looking at the Return On Assets, with a value of -1.48%, QTWO is in the better half of the industry, outperforming 60.92% of the companies in the same industry.
QTWO has a Return On Equity of -3.66%. This is in the better half of the industry: QTWO outperforms 61.97% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | -1.48% | ||
| ROE | -3.66% | ||
| ROIC | N/A |
ROA(3y)-5.5%
ROA(5y)-6.87%
ROE(3y)-16.01%
ROE(5y)-17.84%
ROIC(3y)N/A
ROIC(5y)N/A
1.3 Margins
QTWO's Gross Margin of 51.79% is on the low side compared to the rest of the industry. QTWO is outperformed by 65.85% of its industry peers.
QTWO's Gross Margin has been stable in the last couple of years.
The Profit Margin and Operating Margin are not available for QTWO so they could not be analyzed.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | N/A | ||
| PM (TTM) | N/A | ||
| GM | 51.79% |
OM growth 3YN/A
OM growth 5YN/A
PM growth 3YN/A
PM growth 5YN/A
GM growth 3Y4.1%
GM growth 5Y0.97%
2. Health
2.1 Basic Checks
QTWO does not have a ROIC to compare to the WACC, probably because it is not profitable.
Compared to 1 year ago, QTWO has more shares outstanding
Compared to 5 years ago, QTWO has more shares outstanding
QTWO has a better debt/assets ratio than last year.
2.2 Solvency
QTWO has an Altman-Z score of 4.38. This indicates that QTWO is financially healthy and has little risk of bankruptcy at the moment.
QTWO's Altman-Z score of 4.38 is fine compared to the rest of the industry. QTWO outperforms 67.25% of its industry peers.
The Debt to FCF ratio of QTWO is 3.56, which is a good value as it means it would take QTWO, 3.56 years of fcf income to pay off all of its debts.
QTWO's Debt to FCF ratio of 3.56 is fine compared to the rest of the industry. QTWO outperforms 62.32% of its industry peers.
QTWO has a Debt/Equity ratio of 0.55. This is a neutral value indicating QTWO is somewhat dependend on debt financing.
Looking at the Debt to Equity ratio, with a value of 0.55, QTWO is doing worse than 66.20% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.55 | ||
| Debt/FCF | 3.56 | ||
| Altman-Z | 4.38 |
ROIC/WACCN/A
WACC8.24%
2.3 Liquidity
QTWO has a Current Ratio of 1.43. This is a normal value and indicates that QTWO is financially healthy and should not expect problems in meeting its short term obligations.
With a Current ratio value of 1.43, QTWO perfoms like the industry average, outperforming 45.77% of the companies in the same industry.
A Quick Ratio of 1.43 indicates that QTWO should not have too much problems paying its short term obligations.
With a Quick ratio value of 1.43, QTWO perfoms like the industry average, outperforming 45.77% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.43 | ||
| Quick Ratio | 1.43 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an impressive 107.73% over the past year.
QTWO shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 33.28% yearly.
The Revenue has grown by 13.12% in the past year. This is quite good.
Measured over the past years, QTWO shows a quite strong growth in Revenue. The Revenue has been growing by 17.16% on average per year.
EPS 1Y (TTM)107.73%
EPS 3Y72.41%
EPS 5Y33.28%
EPS Q2Q%80%
Revenue 1Y (TTM)13.12%
Revenue growth 3Y11.78%
Revenue growth 5Y17.16%
Sales Q2Q%14.64%
3.2 Future
The Earnings Per Share is expected to grow by 21.60% on average over the next years. This is a very strong growth
QTWO is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 11.32% yearly.
EPS Next Y35.28%
EPS Next 2Y24.55%
EPS Next 3Y21.6%
EPS Next 5YN/A
Revenue Next Year12.59%
Revenue Next 2Y11.56%
Revenue Next 3Y11.32%
Revenue Next 5YN/A
3.3 Evolution
The estimated forward EPS growth is still strong, although it is decreasing when compared to the stronger growth in the past years.
The estimated forward Revenue growth is still strong, although it is decreasing when compared to the stronger growth in the past years.
4. Valuation
4.1 Price/Earnings Ratio
The Price/Earnings ratio is 49.99, which means the current valuation is very expensive for QTWO.
Based on the Price/Earnings ratio, QTWO is valued a bit cheaper than the industry average as 60.21% of the companies are valued more expensively.
Compared to an average S&P500 Price/Earnings ratio of 26.92, QTWO is valued quite expensively.
The Price/Forward Earnings ratio is 36.95, which means the current valuation is very expensive for QTWO.
The rest of the industry has a similar Price/Forward Earnings ratio as QTWO.
When comparing the Price/Forward Earnings ratio of QTWO to the average of the S&P500 Index (21.49), we can say QTWO is valued expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 49.99 | ||
| Fwd PE | 36.95 |
4.2 Price Multiples
Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of QTWO is on the same level as its industry peers.
Based on the Price/Free Cash Flow ratio, QTWO is valued a bit cheaper than the industry average as 66.20% of the companies are valued more expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 42.27 | ||
| EV/EBITDA | 121.92 |
4.3 Compensation for Growth
The PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a correct valuation of the company.
QTWO's earnings are expected to grow with 21.60% in the coming years. This may justify a more expensive valuation.
PEG (NY)1.42
PEG (5Y)1.5
EPS Next 2Y24.55%
EPS Next 3Y21.6%
5. Dividend
5.1 Amount
No dividends for QTWO!.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
93.99
-0.74 (-0.78%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners106.12%
Inst Owner Change3.74%
Ins Owners0.53%
Ins Owner Change-7.84%
Market Cap5.86B
Analysts76.36
Price Target100.98 (7.44%)
Short Float %5.12%
Short Ratio5.44
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
Yearly DividendN/A
Dividend Growth(5Y)N/A
DPN/A
Div Incr Years0
Div Non Decr Years0
Ex-DateN/A
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)11.46%
Min EPS beat(2)9.95%
Max EPS beat(2)12.97%
EPS beat(4)4
Avg EPS beat(4)16.47%
Min EPS beat(4)9.95%
Max EPS beat(4)23.75%
EPS beat(8)7
Avg EPS beat(8)13.66%
EPS beat(12)10
Avg EPS beat(12)34.76%
EPS beat(16)12
Avg EPS beat(16)27.94%
Revenue beat(2)0
Avg Revenue beat(2)-0.3%
Min Revenue beat(2)-0.35%
Max Revenue beat(2)-0.26%
Revenue beat(4)0
Avg Revenue beat(4)-0.62%
Min Revenue beat(4)-1.02%
Max Revenue beat(4)-0.26%
Revenue beat(8)0
Avg Revenue beat(8)-1.1%
Revenue beat(12)0
Avg Revenue beat(12)-1.5%
Revenue beat(16)0
Avg Revenue beat(16)-1.47%
PT rev (1m)-0.27%
PT rev (3m)-9.29%
EPS NQ rev (1m)0.26%
EPS NQ rev (3m)2.88%
EPS NY rev (1m)-0.22%
EPS NY rev (3m)4.84%
Revenue NQ rev (1m)-0.07%
Revenue NQ rev (3m)0.84%
Revenue NY rev (1m)0.03%
Revenue NY rev (3m)0.58%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 49.99 | ||
| Fwd PE | 36.95 | ||
| P/S | 8.12 | ||
| P/FCF | 42.27 | ||
| P/OCF | 35.31 | ||
| P/B | 10.74 | ||
| P/tB | N/A | ||
| EV/EBITDA | 121.92 |
EPS(TTM)1.88
EY2%
EPS(NY)2.54
Fwd EY2.71%
FCF(TTM)2.22
FCFY2.37%
OCF(TTM)2.66
OCFY2.83%
SpS11.57
BVpS8.76
TBVpS-0.93
PEG (NY)1.42
PEG (5Y)1.5
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | -1.48% | ||
| ROE | -3.66% | ||
| ROCE | N/A | ||
| ROIC | N/A | ||
| ROICexc | N/A | ||
| ROICexgc | N/A | ||
| OM | N/A | ||
| PM (TTM) | N/A | ||
| GM | 51.79% | ||
| FCFM | 19.22% |
ROA(3y)-5.5%
ROA(5y)-6.87%
ROE(3y)-16.01%
ROE(5y)-17.84%
ROIC(3y)N/A
ROIC(5y)N/A
ROICexc(3y)N/A
ROICexc(5y)N/A
ROICexgc(3y)N/A
ROICexgc(5y)N/A
ROCE(3y)N/A
ROCE(5y)N/A
ROICexcg growth 3YN/A
ROICexcg growth 5YN/A
ROICexc growth 3YN/A
ROICexc growth 5YN/A
OM growth 3YN/A
OM growth 5YN/A
PM growth 3YN/A
PM growth 5YN/A
GM growth 3Y4.1%
GM growth 5Y0.97%
F-Score6
Asset Turnover0.53
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.55 | ||
| Debt/FCF | 3.56 | ||
| Debt/EBITDA | 6.35 | ||
| Cap/Depr | 42.02% | ||
| Cap/Sales | 3.79% | ||
| Interest Coverage | N/A | ||
| Cash Conversion | 348.23% | ||
| Profit Quality | N/A | ||
| Current Ratio | 1.43 | ||
| Quick Ratio | 1.43 | ||
| Altman-Z | 4.38 |
F-Score6
WACC8.24%
ROIC/WACCN/A
Cap/Depr(3y)44.55%
Cap/Depr(5y)45.59%
Cap/Sales(3y)4.8%
Cap/Sales(5y)5.13%
Profit Quality(3y)N/A
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)107.73%
EPS 3Y72.41%
EPS 5Y33.28%
EPS Q2Q%80%
EPS Next Y35.28%
EPS Next 2Y24.55%
EPS Next 3Y21.6%
EPS Next 5YN/A
Revenue 1Y (TTM)13.12%
Revenue growth 3Y11.78%
Revenue growth 5Y17.16%
Sales Q2Q%14.64%
Revenue Next Year12.59%
Revenue Next 2Y11.56%
Revenue Next 3Y11.32%
Revenue Next 5YN/A
EBIT growth 1Y74.8%
EBIT growth 3YN/A
EBIT growth 5YN/A
EBIT Next Year84.25%
EBIT Next 3Y38.03%
EBIT Next 5YN/A
FCF growth 1Y766.9%
FCF growth 3Y169.21%
FCF growth 5YN/A
OCF growth 1Y268.96%
OCF growth 3Y63.45%
OCF growth 5Y198.8%