SOLARWINDS CORP (SWI) Stock Fundamental Analysis
NYSE:SWI - New York Stock Exchange, Inc. - US83417Q2049 - Common Stock - Currency: USD
We assign a fundamental rating of 4 out of 10 to SWI. SWI was compared to 283 industry peers in the Software industry. While SWI belongs to the best of the industry regarding profitability, there are concerns on its financial health. SWI is valued correctly, but it does not seem to be growing.
1. Profitability
1.1 Basic Checks
In the past year SWI was profitable.
In the past year SWI had a positive cash flow from operations.
The reported net income has been mixed in the past 5 years: SWI reported negative net income in multiple years.
SWI had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
Looking at the Return On Assets, with a value of 3.53%, SWI is in the better half of the industry, outperforming 72.18% of the companies in the same industry.
SWI has a Return On Equity of 7.99%. This is in the better half of the industry: SWI outperforms 72.89% of its industry peers.
The Return On Invested Capital of SWI (6.11%) is better than 77.46% of its industry peers.
SWI had an Average Return On Invested Capital over the past 3 years of 4.19%. This is significantly below the industry average of 12.21%.
The 3 year average ROIC (4.19%) for SWI is below the current ROIC(6.11%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.53% | ||
| ROE | 7.99% | ||
| ROIC | 6.11% |
ROA(3y)-8.6%
ROA(5y)-4.82%
ROE(3y)-20.17%
ROE(5y)-11.5%
ROIC(3y)4.19%
ROIC(5y)N/A
1.3 Margins
SWI has a Profit Margin of 14.04%. This is in the better half of the industry: SWI outperforms 78.52% of its industry peers.
SWI's Profit Margin has improved in the last couple of years.
Looking at the Operating Margin, with a value of 26.15%, SWI belongs to the top of the industry, outperforming 92.61% of the companies in the same industry.
In the last couple of years the Operating Margin of SWI has grown nicely.
SWI's Gross Margin of 89.55% is amongst the best of the industry. SWI outperforms 97.54% of its industry peers.
In the last couple of years the Gross Margin of SWI has grown nicely.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 26.15% | ||
| PM (TTM) | 14.04% | ||
| GM | 89.55% |
OM growth 3YN/A
OM growth 5Y16.98%
PM growth 3YN/A
PM growth 5Y38.56%
GM growth 3Y9.39%
GM growth 5Y4.93%
2. Health
2.1 Basic Checks
The Return on Invested Capital (ROIC) is below the Cost of Capital (WACC), so SWI is destroying value.
SWI has more shares outstanding than it did 1 year ago.
SWI has more shares outstanding than it did 5 years ago.
SWI has a worse debt/assets ratio than last year.
2.2 Solvency
Based on the Altman-Z score of 1.03, we must say that SWI is in the distress zone and has some risk of bankruptcy.
Looking at the Altman-Z score, with a value of 1.03, SWI is in line with its industry, outperforming 40.14% of the companies in the same industry.
The Debt to FCF ratio of SWI is 7.19, which is on the high side as it means it would take SWI, 7.19 years of fcf income to pay off all of its debts.
The Debt to FCF ratio of SWI (7.19) is comparable to the rest of the industry.
A Debt/Equity ratio of 0.85 indicates that SWI is somewhat dependend on debt financing.
SWI has a worse Debt to Equity ratio (0.85) than 72.18% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.85 | ||
| Debt/FCF | 7.19 | ||
| Altman-Z | 1.03 |
ROIC/WACC0.54
WACC11.32%
2.3 Liquidity
SWI has a Current Ratio of 0.85. This is a bad value and indicates that SWI is not financially healthy enough and could expect problems in meeting its short term obligations.
SWI has a Current ratio of 0.85. This is amonst the worse of the industry: SWI underperforms 80.99% of its industry peers.
A Quick Ratio of 0.85 indicates that SWI may have some problems paying its short term obligations.
SWI's Quick ratio of 0.85 is on the low side compared to the rest of the industry. SWI is outperformed by 80.63% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.85 | ||
| Quick Ratio | 0.85 |
3. Growth
3.1 Past
SWI shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 51.14%, which is quite impressive.
SWI shows a decrease in Earnings Per Share. Measured over the last years, the EPS has been decreasing by -4.79% yearly.
SWI shows a small growth in Revenue. In the last year, the Revenue has grown by 5.03%.
SWI shows a small growth in Revenue. Measured over the last years, the Revenue has been growing by 3.56% yearly.
EPS 1Y (TTM)51.14%
EPS 3Y-5.38%
EPS 5Y-4.79%
EPS Q2Q%112.5%
Revenue 1Y (TTM)5.03%
Revenue growth 3Y3.51%
Revenue growth 5Y3.56%
Sales Q2Q%6.14%
3.2 Future
The Earnings Per Share is expected to decrease by -6.26% on average over the next years.
Based on estimates for the next years, SWI will show a small growth in Revenue. The Revenue will grow by 4.00% on average per year.
EPS Next Y-17.13%
EPS Next 2Y-6.26%
EPS Next 3YN/A
EPS Next 5YN/A
Revenue Next Year3.5%
Revenue Next 2Y4%
Revenue Next 3YN/A
Revenue Next 5YN/A
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 decreasing.
The Revenue growth rate is stable: in the next years the growth will be about the same than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
A Price/Earnings ratio of 13.90 indicates a correct valuation of SWI.
SWI's Price/Earnings ratio is rather cheap when compared to the industry. SWI is cheaper than 86.27% of the companies in the same industry.
SWI's Price/Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 25.91.
The Price/Forward Earnings ratio is 16.78, which indicates a correct valuation of SWI.
Based on the Price/Forward Earnings ratio, SWI is valued cheaper than 83.10% of the companies in the same industry.
SWI's Price/Forward Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 21.85.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 13.9 | ||
| Fwd PE | 16.78 |
4.2 Price Multiples
Based on the Enterprise Value to EBITDA ratio, SWI is valued cheaper than 85.56% of the companies in the same industry.
82.75% of the companies in the same industry are more expensive than SWI, based on the Price/Free Cash Flow ratio.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 18.91 | ||
| EV/EBITDA | 14.54 |
4.3 Compensation for Growth
SWI has a very decent profitability rating, which may justify a higher PE ratio.
SWI's earnings are expected to decrease with -6.26% in the coming years. This may justify a cheaper valuation.
PEG (NY)N/A
PEG (5Y)N/A
EPS Next 2Y-6.26%
EPS Next 3YN/A
5. Dividend
5.1 Amount
SWI does not give a dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
18.49
0 (0%)
Chartmill FA Rating
GICS SectorInformation Technology
GICS IndustryGroupSoftware & Services
GICS IndustrySoftware
Earnings (Last)
Earnings (Next)
Inst Owners31.68%
Inst Owner Change0.41%
Ins Owners1.27%
Ins Owner Change-3.78%
Market Cap3.17B
Analysts51.43
Price Target17.49 (-5.41%)
Short Float %N/A
Short RatioN/A
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | N/A |
Yearly Dividend0.99
Dividend Growth(5Y)N/A
DP150.27%
Div Incr Years0
Div Non Decr Years0
Ex-DateN/A
Surprises & Revisions
EPS beat(2)2
Avg EPS beat(2)46.74%
Min EPS beat(2)8.17%
Max EPS beat(2)85.3%
EPS beat(4)4
Avg EPS beat(4)34.6%
Min EPS beat(4)8.17%
Max EPS beat(4)85.3%
EPS beat(8)8
Avg EPS beat(8)27.79%
EPS beat(12)10
Avg EPS beat(12)18.98%
EPS beat(16)14
Avg EPS beat(16)18.3%
Revenue beat(2)2
Avg Revenue beat(2)2.33%
Min Revenue beat(2)2.07%
Max Revenue beat(2)2.6%
Revenue beat(4)4
Avg Revenue beat(4)1.59%
Min Revenue beat(4)0.29%
Max Revenue beat(4)2.6%
Revenue beat(8)8
Avg Revenue beat(8)2.03%
Revenue beat(12)10
Avg Revenue beat(12)1.35%
Revenue beat(16)12
Avg Revenue beat(16)-2.87%
PT rev (1m)0%
PT rev (3m)17.72%
EPS NQ rev (1m)0%
EPS NQ rev (3m)3.92%
EPS NY rev (1m)0%
EPS NY rev (3m)2.12%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)0.44%
Revenue NY rev (1m)0%
Revenue NY rev (3m)0.45%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 13.9 | ||
| Fwd PE | 16.78 | ||
| P/S | 3.98 | ||
| P/FCF | 18.91 | ||
| P/OCF | 16.85 | ||
| P/B | 2.27 | ||
| P/tB | N/A | ||
| EV/EBITDA | 14.54 |
EPS(TTM)1.33
EY7.19%
EPS(NY)1.1
Fwd EY5.96%
FCF(TTM)0.98
FCFY5.29%
OCF(TTM)1.1
OCFY5.93%
SpS4.64
BVpS8.16
TBVpS-6.36
PEG (NY)N/A
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 3.53% | ||
| ROE | 7.99% | ||
| ROCE | 7.74% | ||
| ROIC | 6.11% | ||
| ROICexc | 6.77% | ||
| ROICexgc | N/A | ||
| OM | 26.15% | ||
| PM (TTM) | 14.04% | ||
| GM | 89.55% | ||
| FCFM | 21.06% |
ROA(3y)-8.6%
ROA(5y)-4.82%
ROE(3y)-20.17%
ROE(5y)-11.5%
ROIC(3y)4.19%
ROIC(5y)N/A
ROICexc(3y)4.61%
ROICexc(5y)N/A
ROICexgc(3y)N/A
ROICexgc(5y)N/A
ROCE(3y)5.3%
ROCE(5y)N/A
ROICexcg growth 3YN/A
ROICexcg growth 5YN/A
ROICexc growth 3YN/A
ROICexc growth 5Y38.26%
OM growth 3YN/A
OM growth 5Y16.98%
PM growth 3YN/A
PM growth 5Y38.56%
GM growth 3Y9.39%
GM growth 5Y4.93%
F-Score7
Asset Turnover0.25
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.85 | ||
| Debt/FCF | 7.19 | ||
| Debt/EBITDA | 4.22 | ||
| Cap/Depr | 27.54% | ||
| Cap/Sales | 2.57% | ||
| Interest Coverage | 1.99 | ||
| Cash Conversion | 66.59% | ||
| Profit Quality | 149.97% | ||
| Current Ratio | 0.85 | ||
| Quick Ratio | 0.85 | ||
| Altman-Z | 1.03 |
F-Score7
WACC11.32%
ROIC/WACC0.54
Cap/Depr(3y)23.89%
Cap/Depr(5y)17.54%
Cap/Sales(3y)2.62%
Cap/Sales(5y)2.58%
Profit Quality(3y)N/A
Profit Quality(5y)N/A
High Growth Momentum
Growth
EPS 1Y (TTM)51.14%
EPS 3Y-5.38%
EPS 5Y-4.79%
EPS Q2Q%112.5%
EPS Next Y-17.13%
EPS Next 2Y-6.26%
EPS Next 3YN/A
EPS Next 5YN/A
Revenue 1Y (TTM)5.03%
Revenue growth 3Y3.51%
Revenue growth 5Y3.56%
Sales Q2Q%6.14%
Revenue Next Year3.5%
Revenue Next 2Y4%
Revenue Next 3YN/A
Revenue Next 5YN/A
EBIT growth 1Y38.7%
EBIT growth 3YN/A
EBIT growth 5Y21.14%
EBIT Next Year9%
EBIT Next 3YN/A
EBIT Next 5YN/A
FCF growth 1Y1.59%
FCF growth 3Y5.65%
FCF growth 5Y-10.12%
OCF growth 1Y2.63%
OCF growth 3Y6.43%
OCF growth 5Y-8.95%