Q2 HOLDINGS INC (QTWO) Stock Fundamental Analysis
NYSE:QTWO - New York Stock Exchange, Inc. - US74736L1098 - Common Stock - Currency: USD
We assign a fundamental rating of 4 out of 10 to QTWO. QTWO was compared to 284 industry peers in the Software industry. The financial health of QTWO is average, but there are quite some concerns on its profitability. QTWO shows excellent growth, but is valued quite expensive already.
1. Profitability
1.1 Basic Checks
QTWO had positive earnings in the past year.
QTWO had a positive operating cash flow in the past year.
QTWO had negative earnings in each of the past 5 years.
QTWO had a positive operating cash flow in 4 of the past 5 years.
1.2 Ratios
The Return On Assets of QTWO (-2.98%) is comparable to the rest of the industry.
QTWO has a Return On Equity of -7.44%. This is comparable to the rest of the industry: QTWO outperforms 53.52% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | -2.98% | ||
| ROE | -7.44% | ||
| 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 has a worse Gross Margin (50.90%) than 66.20% of its industry peers.
QTWO's Gross Margin has been stable in the last couple of years.
QTWO does not have Profit Margin and Operating Margin available, so we won't be analyzing them here.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | N/A | ||
| PM (TTM) | N/A | ||
| GM | 50.9% |
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.
QTWO has more shares outstanding than it did 1 year ago.
The number of shares outstanding for QTWO has been increased compared to 5 years ago.
The debt/assets ratio for QTWO has been reduced compared to a year ago.
2.2 Solvency
An Altman-Z score of 4.19 indicates that QTWO is not in any danger for bankruptcy at the moment.
With a decent Altman-Z score value of 4.19, QTWO is doing good in the industry, outperforming 66.90% of the companies in the same industry.
QTWO has a debt to FCF ratio of 4.61. This is a neutral value as QTWO would need 4.61 years to pay back of all of its debts.
QTWO has a Debt to FCF ratio of 4.61. This is comparable to the rest of the industry: QTWO outperforms 59.51% of its industry peers.
QTWO has a Debt/Equity ratio of 0.58. This is a neutral value indicating QTWO is somewhat dependend on debt financing.
The Debt to Equity ratio of QTWO (0.58) is worse than 66.20% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.58 | ||
| Debt/FCF | 4.61 | ||
| Altman-Z | 4.19 |
ROIC/WACCN/A
WACC10.38%
2.3 Liquidity
QTWO has a Current Ratio of 1.40. This is a normal value and indicates that QTWO is financially healthy and should not expect problems in meeting its short term obligations.
QTWO has a Current ratio (1.40) which is in line with its industry peers.
A Quick Ratio of 1.40 indicates that QTWO should not have too much problems paying its short term obligations.
QTWO has a Quick ratio of 1.40. This is comparable to the rest of the industry: QTWO outperforms 45.07% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.4 | ||
| Quick Ratio | 1.4 |
3. Growth
3.1 Past
The Earnings Per Share has grown by an impressive 107.73% over the past year.
Measured over the past years, QTWO shows a very strong growth in Earnings Per Share. The EPS has been growing by 33.28% on average per year.
QTWO shows quite a strong growth in Revenue. In the last year, the Revenue has grown by 11.50%.
QTWO shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 17.16% yearly.
EPS 1Y (TTM)107.73%
EPS 3Y72.41%
EPS 5Y33.28%
EPS Q2Q%80%
Revenue 1Y (TTM)11.5%
Revenue growth 3Y11.78%
Revenue growth 5Y17.16%
Sales Q2Q%14.64%
3.2 Future
The Earnings Per Share is expected to grow by 27.19% on average over the next years. This is a very strong growth
The Revenue is expected to grow by 11.27% on average over the next years. This is quite good.
EPS Next Y28.86%
EPS Next 2Y25.29%
EPS Next 3Y27.19%
EPS Next 5YN/A
Revenue Next Year12.42%
Revenue Next 2Y11.41%
Revenue Next 3Y11.27%
Revenue Next 5YN/A
3.3 Evolution
The EPS growth rate is stable: in the next years the growth will be about the same than in the last 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 47.67, 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.
QTWO's Price/Earnings ratio indicates a rather expensive valuation when compared to the S&P500 average which is at 24.21.
With a Price/Forward Earnings ratio of 34.81, QTWO can be considered very expensive at the moment.
QTWO's Price/Forward Earnings ratio is a bit cheaper when compared to the industry. QTWO is cheaper than 60.56% of the companies in the same industry.
When comparing the Price/Forward Earnings ratio of QTWO to the average of the S&P500 Index (20.44), we can say QTWO is valued expensively.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 47.67 | ||
| Fwd PE | 34.81 |
4.2 Price Multiples
The rest of the industry has a similar Enterprise Value to EBITDA ratio as QTWO.
QTWO's Price/Free Cash Flow is on the same level as the industry average.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 52.32 | ||
| EV/EBITDA | 162.14 |
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 27.19% in the coming years. This may justify a more expensive valuation.
PEG (NY)1.65
PEG (5Y)1.43
EPS Next 2Y25.29%
EPS Next 3Y27.19%
5. Dividend
5.1 Amount
QTWO does not give a dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
89.62
-1.17 (-1.29%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners104.42%
Inst Owner Change1.81%
Ins Owners1.85%
Ins Owner Change-9.97%
Market Cap5.58B
Analysts76.36
Price Target101.25 (12.98%)
Short Float %5.24%
Short Ratio3.8
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)16.85%
Min EPS beat(2)9.95%
Max EPS beat(2)23.75%
EPS beat(4)4
Avg EPS beat(4)15.47%
Min EPS beat(4)8.97%
Max EPS beat(4)23.75%
EPS beat(8)7
Avg EPS beat(8)31.26%
EPS beat(12)9
Avg EPS beat(12)29.47%
EPS beat(16)12
Avg EPS beat(16)28.82%
Revenue beat(2)0
Avg Revenue beat(2)-0.64%
Min Revenue beat(2)-1.02%
Max Revenue beat(2)-0.26%
Revenue beat(4)0
Avg Revenue beat(4)-0.74%
Min Revenue beat(4)-1.02%
Max Revenue beat(4)-0.26%
Revenue beat(8)0
Avg Revenue beat(8)-1.07%
Revenue beat(12)0
Avg Revenue beat(12)-1.53%
Revenue beat(16)0
Avg Revenue beat(16)-1.5%
PT rev (1m)-7.9%
PT rev (3m)-4.35%
EPS NQ rev (1m)-0.19%
EPS NQ rev (3m)5.64%
EPS NY rev (1m)-0.13%
EPS NY rev (3m)2.33%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)1.08%
Revenue NY rev (1m)0.47%
Revenue NY rev (3m)0.96%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 47.67 | ||
| Fwd PE | 34.81 | ||
| P/S | 8.02 | ||
| P/FCF | 52.32 | ||
| P/OCF | 41.13 | ||
| P/B | 10.78 | ||
| P/tB | N/A | ||
| EV/EBITDA | 162.14 |
EPS(TTM)1.88
EY2.1%
EPS(NY)2.57
Fwd EY2.87%
FCF(TTM)1.71
FCFY1.91%
OCF(TTM)2.18
OCFY2.43%
SpS11.18
BVpS8.31
TBVpS-1.44
PEG (NY)1.65
PEG (5Y)1.43
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | -2.98% | ||
| ROE | -7.44% | ||
| ROCE | N/A | ||
| ROIC | N/A | ||
| ROICexc | N/A | ||
| ROICexgc | N/A | ||
| OM | N/A | ||
| PM (TTM) | N/A | ||
| GM | 50.9% | ||
| FCFM | 15.32% |
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 Turnover0.54
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.58 | ||
| Debt/FCF | 4.61 | ||
| Debt/EBITDA | 8.84 | ||
| Cap/Depr | 42.19% | ||
| Cap/Sales | 4.17% | ||
| Interest Coverage | N/A | ||
| Cash Conversion | 397.24% | ||
| Profit Quality | N/A | ||
| Current Ratio | 1.4 | ||
| Quick Ratio | 1.4 | ||
| Altman-Z | 4.19 |
F-Score6
WACC10.38%
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 Y28.86%
EPS Next 2Y25.29%
EPS Next 3Y27.19%
EPS Next 5YN/A
Revenue 1Y (TTM)11.5%
Revenue growth 3Y11.78%
Revenue growth 5Y17.16%
Sales Q2Q%14.64%
Revenue Next Year12.42%
Revenue Next 2Y11.41%
Revenue Next 3Y11.27%
Revenue Next 5YN/A
EBIT growth 1Y53.89%
EBIT growth 3YN/A
EBIT growth 5YN/A
EBIT Next Year78.56%
EBIT Next 3Y39.3%
EBIT Next 5YN/A
FCF growth 1Y169.16%
FCF growth 3Y169.21%
FCF growth 5YN/A
OCF growth 1Y93.12%
OCF growth 3Y63.45%
OCF growth 5Y198.8%