Morningstar | WiseTech's Share Price Not Justified by Underlying Earnings Growth
WiseTech Global has grown quickly in recent years, with revenue increasing at a CAGR of 34% between fiscal 2013 and 2018. We expect strong growth to continue and forecast a revenue CAGR of 15% over the next decade, underpinned by the global rollout of WiseTech’s cloud-based logistics software platform at large third-party logistics clients such as DHL. The narrow economic moat, which is based on switching costs, and strong annual client retention rate of around 99% should protect earnings from competition as the business grows. We expect revenue growth and the scalable business model to drive margin expansion, and we forecast an improvement in the EBIT margin from 26% in fiscal 2018 to 31% by fiscal 2028. However, we expect ongoing investment in capitalised research and development to cause weak cash conversion for the foreseeable future.WiseTech Global is engaged in providing software solutions to the logistics industry across more than 125 countries. Co. develops, sells and implements software solutions that enable logistics service providers to facilitate the movement and storage of goods and information domestically and internationally. Co.'s customers range from small and mid-sized regional or domestic enterprises to large multi-national companies.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
We have operations in 27 countries.
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