Reckon Remains Overvalued as Competitors Gather Steam
We continue to believe no-moat-rated Reckon is overvalued with the current share price of AUD 1.63 some 25% above our AUD 1.30 fair value estimate. Reckon’s EPS fell by 27% in 2016 following a 20% fall in the prior year, reflecting structural challenges facing the business which we expect to continue. We forecast an 11% EPS decline in 2017 before a return to earnings growth in 2018, driven by new investments, but only expect an EPS CAGR of 4.4% over the next decade. Management haven’t provided e...Reckon is organized into three reporting and operational segments: Practice Management, consisting of practice management, tax, client accounting and related software under the APS brand, Elite and Docs business accounting software solutions, and nQueue software solutions; Document Management, consisting of Virtual Cabinet and SmartVault secure cloud based online document management processes; and Business, consisting of Reckon One cloud based accounting software, Reckon Accounts Hosted online accounting software products, as well as Reckon Accounts, including Reckon BankData, a bank feed solution, and Reckon GovConnect, a SRP-enabled solution for lodging reports to the government agencies.
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