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SWITCH INC - A (SWCH) Stock Fundamental Analysis

NYSE:SWCH - New York Stock Exchange, Inc. - US87105L1044 - Common Stock - Currency: USD

34.25  +0.02 (+0.06%)

After market: 34.26 +0.01 (+0.03%)

Fundamental Rating

3

Overall SWCH gets a fundamental rating of 3 out of 10. We evaluated SWCH against 82 industry peers in the IT Services industry. While SWCH is still in line with the averages on profitability rating, there are concerns on its financial health. SWCH is valied quite expensively at the moment, while it does show a decent growth rate.


Dividend Valuation Growth Profitability Health

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4

1. Profitability

1.1 Basic Checks

In the past year SWCH was profitable.
In the past year SWCH had a positive cash flow from operations.
SWCH Yearly Net Income VS EBIT VS OCF VS FCFSWCH Yearly Net Income VS EBIT VS OCF VS FCFYearly Net Income VS EBIT VS OCF VS FCF 2015 2016 2017 2018 2019 2020 2021 0 100M -100M 200M -200M

1.2 Ratios

SWCH has a Return On Assets of 11.48%. This is amongst the best in the industry. SWCH outperforms 88.49% of its industry peers.
The Return On Equity of SWCH (49.24%) is better than 97.12% of its industry peers.
SWCH has a Return On Invested Capital of 2.70%. This is comparable to the rest of the industry: SWCH outperforms 56.12% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for SWCH is significantly below the industry average of 21.61%.
Industry RankSector Rank
ROA 11.48%
ROE 49.24%
ROIC 2.7%
ROA(3y)N/A
ROA(5y)N/A
ROE(3y)N/A
ROE(5y)N/A
ROIC(3y)4.04%
ROIC(5y)N/A
SWCH Yearly ROA, ROE, ROICSWCH Yearly ROA, ROE, ROICYearly ROA, ROE, ROIC 2015 2016 2017 2018 2019 2020 2021 0 10 -10 20

1.3 Margins

The Profit Margin of SWCH (56.70%) is better than 99.28% of its industry peers.
In the last couple of years the Profit Margin of SWCH has declined.
Looking at the Operating Margin, with a value of 14.07%, SWCH is in the better half of the industry, outperforming 74.82% of the companies in the same industry.
SWCH's Operating Margin has improved in the last couple of years.
Industry RankSector Rank
OM 14.07%
PM (TTM) 56.7%
GM N/A
OM growth 3Y9.41%
OM growth 5Y1.92%
PM growth 3Y-3.27%
PM growth 5Y-37.85%
GM growth 3YN/A
GM growth 5YN/A
SWCH Yearly Profit, Operating, Gross MarginsSWCH Yearly Profit, Operating, Gross MarginsYearly Profit, Operating, Gross Margins 2015 2016 2017 2018 2019 2020 2021 0 10 20 30 40

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0

2. Health

2.1 Basic Checks

With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), SWCH is destroying value.
The number of shares outstanding for SWCH has been increased compared to 1 year ago.
SWCH has a worse debt/assets ratio than last year.
SWCH Yearly Shares OutstandingSWCH Yearly Shares OutstandingYearly Shares Outstanding 2015 2016 2017 2018 2019 2020 2021 50M 100M 150M 200M 250M
SWCH Yearly Total Debt VS Total AssetsSWCH Yearly Total Debt VS Total AssetsYearly Total Debt VS Total Assets 2015 2016 2017 2018 2019 2020 2021 500M 1B 1.5B 2B 2.5B

2.2 Solvency

SWCH has an Altman-Z score of 1.66. This is a bad value and indicates that SWCH is not financially healthy and even has some risk of bankruptcy.
SWCH's Altman-Z score of 1.66 is in line compared to the rest of the industry. SWCH outperforms 48.92% of its industry peers.
A Debt/Equity ratio of 2.53 is on the high side and indicates that SWCH has dependencies on debt financing.
The Debt to Equity ratio of SWCH (2.53) is worse than 91.37% of its industry peers.
Industry RankSector Rank
Debt/Equity 2.53
Debt/FCF N/A
Altman-Z 1.66
ROIC/WACC0.28
WACC9.5%
SWCH Yearly LT Debt VS Equity VS FCFSWCH Yearly LT Debt VS Equity VS FCFYearly LT Debt VS Equity VS FCF 2015 2016 2017 2018 2019 2020 2021 0 500M 1B 1.5B

2.3 Liquidity

SWCH has a Current Ratio of 0.37. This is a bad value and indicates that SWCH is not financially healthy enough and could expect problems in meeting its short term obligations.
SWCH has a Current ratio of 0.37. This is amonst the worse of the industry: SWCH underperforms 92.09% of its industry peers.
SWCH has a Quick Ratio of 0.37. This is a bad value and indicates that SWCH is not financially healthy enough and could expect problems in meeting its short term obligations.
SWCH has a Quick ratio of 0.37. This is amonst the worse of the industry: SWCH underperforms 92.09% of its industry peers.
Industry RankSector Rank
Current Ratio 0.37
Quick Ratio 0.37
SWCH Yearly Current Assets VS Current LiabilitesSWCH Yearly Current Assets VS Current LiabilitesYearly Current Assets VS Current Liabilites 2015 2016 2017 2018 2019 2020 2021 50M 100M 150M 200M 250M

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5

3. Growth

3.1 Past

SWCH shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 100.00%, which is quite impressive.
The earnings per share for SWCH have been decreasing by -47.76% on average. This is quite bad
Looking at the last year, SWCH shows a quite strong growth in Revenue. The Revenue has grown by 19.74% in the last year.
The Revenue has been growing by 13.21% on average over the past years. This is quite good.
EPS 1Y (TTM)100%
EPS 3Y22.92%
EPS 5Y-47.76%
EPS Q2Q%38.67%
Revenue 1Y (TTM)19.74%
Revenue growth 3Y13.41%
Revenue growth 5Y13.21%
Sales Q2Q%10.35%

3.2 Future

The Earnings Per Share is expected to decrease by -30.59% on average over the next years. This is quite bad
SWCH is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 9.07% yearly.
EPS Next Y549.92%
EPS Next 2Y47.96%
EPS Next 3Y0.66%
EPS Next 5Y-30.59%
Revenue Next Year13.62%
Revenue Next 2Y12.42%
Revenue Next 3Y12.77%
Revenue Next 5Y9.07%

3.3 Evolution

When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
SWCH Yearly Revenue VS EstimatesSWCH Yearly Revenue VS EstimatesYearly Revenue VS Estimates 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 200M 400M 600M 800M
SWCH Yearly EPS VS EstimatesSWCH Yearly EPS VS EstimatesYearly EPS VS Estimates 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 0.5 1 1.5

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2

4. Valuation

4.1 Price/Earnings Ratio

The Price/Earnings ratio is 122.32, which means the current valuation is very expensive for SWCH.
The rest of the industry has a similar Price/Earnings ratio as SWCH.
Compared to an average S&P500 Price/Earnings ratio of 28.04, SWCH is valued quite expensively.
Based on the Price/Forward Earnings ratio of 60.18, the valuation of SWCH can be described as expensive.
Compared to the rest of the industry, the Price/Forward Earnings ratio of SWCH is on the same level as its industry peers.
Compared to an average S&P500 Price/Forward Earnings ratio of 37.64, SWCH is valued quite expensively.
Industry RankSector Rank
PE 122.32
Fwd PE 60.18
SWCH Price Earnings VS Forward Price EarningsSWCH Price Earnings VS Forward Price Earnings ChartPrice Earnings - Forward Price Earnings PE FPE 20 40 60 80 100

4.2 Price Multiples

The rest of the industry has a similar Enterprise Value to EBITDA ratio as SWCH.
Industry RankSector Rank
P/FCF N/A
EV/EBITDA 24.64
SWCH Per share dataSWCH EPS, Sales, OCF, FCF, BookValue per sharePer Share Data Per Share 0 2 4

4.3 Compensation for Growth

The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
PEG (NY)0.22
PEG (5Y)N/A
EPS Next 2Y47.96%
EPS Next 3Y0.66%

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4

5. Dividend

5.1 Amount

With a yearly dividend of 0.61%, SWCH is not a good candidate for dividend investing.
Compared to an average industry Dividend Yield of 2.39, SWCH pays a bit more dividend than its industry peers.
Compared to an average S&P500 Dividend Yield of 2.31, SWCH's dividend is way lower than the S&P500 average.
Industry RankSector Rank
Dividend Yield 0.61%

5.2 History

On average, the dividend of SWCH grows each year by 51.63%, which is quite nice.
SWCH has been paying a dividend for over 5 years, so it has already some track record.
Dividend Growth(5Y)51.63%
Div Incr YearsN/A
Div Non Decr YearsN/A
SWCH Yearly Dividends per shareSWCH Yearly Dividends per shareYearly Dividends per share 2018 2019 2020 2021 2022 0.05 0.1 0.15

5.3 Sustainability

8.33% of the earnings are spent on dividend by SWCH. This is a low number and sustainable payout ratio.
DP8.33%
EPS Next 2Y47.96%
EPS Next 3Y0.66%
SWCH Yearly Income VS Free CF VS DividendSWCH Yearly Income VS Free CF VS DividendYearly Income VS Free CF VS Dividend 2015 2016 2017 2018 2019 2020 2021 0 -100M -200M
SWCH Dividend Payout.SWCH Dividend Payout, showing the Payout Ratio.SWCH Dividend Payout.PayoutRetained Earnings

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SWITCH INC - A

NYSE:SWCH (12/5/2022, 8:04:00 PM)

After market: 34.26 +0.01 (+0.03%)

34.25

+0.02 (+0.06%)

Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustryIT Services
Earnings (Last)11-09 2022-11-09/amc
Earnings (Next)02-22 2023-02-22
Inst Owners0.59%
Inst Owner Change0%
Ins Owners26.17%
Ins Owner Change0%
Market Cap5.41B
Analysts70.53
Price Target33.79 (-1.34%)
Short Float %N/A
Short RatioN/A
Dividend
Industry RankSector Rank
Dividend Yield 0.61%
Yearly Dividend0.21
Dividend Growth(5Y)51.63%
DP8.33%
Div Incr YearsN/A
Div Non Decr YearsN/A
Ex-DateN/A
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-80.5%
Min EPS beat(2)-127.13%
Max EPS beat(2)-33.86%
EPS beat(4)2
Avg EPS beat(4)45.11%
Min EPS beat(4)-127.13%
Max EPS beat(4)286.79%
EPS beat(8)N/A
Avg EPS beat(8)N/A
EPS beat(12)N/A
Avg EPS beat(12)N/A
EPS beat(16)N/A
Avg EPS beat(16)N/A
Revenue beat(2)1
Avg Revenue beat(2)-0.19%
Min Revenue beat(2)-0.98%
Max Revenue beat(2)0.61%
Revenue beat(4)1
Avg Revenue beat(4)-1.08%
Min Revenue beat(4)-2.56%
Max Revenue beat(4)0.61%
Revenue beat(8)N/A
Avg Revenue beat(8)N/A
Revenue beat(12)N/A
Avg Revenue beat(12)N/A
Revenue beat(16)N/A
Avg Revenue beat(16)N/A
PT rev (1m)0%
PT rev (3m)N/A
EPS NQ rev (1m)-45.11%
EPS NQ rev (3m)N/A
EPS NY rev (1m)0%
EPS NY rev (3m)N/A
Revenue NQ rev (1m)2.42%
Revenue NQ rev (3m)N/A
Revenue NY rev (1m)0%
Revenue NY rev (3m)N/A
Valuation
Industry RankSector Rank
PE 122.32
Fwd PE 60.18
P/S 8.09
P/FCF N/A
P/OCF 19.78
P/B 7.03
P/tB 15.49
EV/EBITDA 24.64
EPS(TTM)0.28
EY0.82%
EPS(NY)0.57
Fwd EY1.66%
FCF(TTM)-1.84
FCFYN/A
OCF(TTM)1.73
OCFY5.06%
SpS4.23
BVpS4.88
TBVpS2.21
PEG (NY)0.22
PEG (5Y)N/A
Profitability
Industry RankSector Rank
ROA 11.48%
ROE 49.24%
ROCE N/A
ROIC 2.7%
ROICexc 2.73%
ROICexgc 2.96%
OM 14.07%
PM (TTM) 56.7%
GM N/A
FCFM N/A
ROA(3y)N/A
ROA(5y)N/A
ROE(3y)N/A
ROE(5y)N/A
ROIC(3y)4.04%
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 3Y0.27%
ROICexcg growth 5Y-9.03%
ROICexc growth 3YN/A
ROICexc growth 5YN/A
OM growth 3Y9.41%
OM growth 5Y1.92%
PM growth 3Y-3.27%
PM growth 5Y-37.85%
GM growth 3YN/A
GM growth 5YN/A
F-Score4
Asset Turnover0.2
Health
Industry RankSector Rank
Debt/Equity 2.53
Debt/FCF N/A
Debt/EBITDA 6.57
Cap/Depr 278.24%
Cap/Sales N/A
Interest Coverage N/A
Cash Conversion N/A
Profit Quality N/A
Current Ratio 0.37
Quick Ratio 0.37
Altman-Z 1.66
F-Score4
WACC9.5%
ROIC/WACC0.28
Cap/Depr(3y)252.05%
Cap/Depr(5y)292.39%
Cap/Sales(3y)N/A
Cap/Sales(5y)N/A
Profit Quality(3y)N/A
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)100%
EPS 3Y22.92%
EPS 5Y-47.76%
EPS Q2Q%38.67%
EPS Next Y549.92%
EPS Next 2Y47.96%
EPS Next 3Y0.66%
EPS Next 5Y-30.59%
Revenue 1Y (TTM)19.74%
Revenue growth 3Y13.41%
Revenue growth 5Y13.21%
Sales Q2Q%10.35%
Revenue Next Year13.62%
Revenue Next 2Y12.42%
Revenue Next 3Y12.77%
Revenue Next 5Y9.07%
EBIT growth 1Y-7.97%
EBIT growth 3Y24.08%
EBIT growth 5Y15.38%
EBIT Next Year259.7%
EBIT Next 3Y66.9%
EBIT Next 5Y38.27%
FCF growth 1Y-160.15%
FCF growth 3YN/A
FCF growth 5YN/A
OCF growth 1Y21.28%
OCF growth 3Y13.51%
OCF growth 5Y9.44%