NSIT - Embedded Expectations Analysis - 2020 08 13
Insight Enterprises, Inc. (NSIT:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) earnings, with a 16.1x Uniform P/E. At these levels, the market has bearish expectations for the firm, and management may be concerned about their cash flow guidance, digital trends, and coronavirus headwindsSpecifically, management may lack confidence in their ability to beat cash flow guidance, meet operating requirements during the pandemic, and execute on their partner relationships. In addition, they may have concerns about the sustainability of favorable digital trends and the PCM acquisition's impact on selling and administrative expenses. Furthermore, management may be exaggerating their focus on cloud and data center transformation, business resiliency, and their Connected Platform's capabilities in helping prevent the spread of the coronavirus. Finally, they may be concerned about the coronavirus impact on their small business clients, and exaggerating their competitive advantage relative to smaller players in terms of their ability to invest in e-commerce and digital marketing engines
Insight Enterprises is a provider of digital technology, cloud/data center optimization, connected workforce, and supply chain optimization solutions and services. The company is organized in the following three operating segments, which are primarily defined by their related geographies: North America; Europe, Middle East and Africa (EMEA); and Asia-Pacific (APAC). The company's offerings in North America and certain countries in EMEA and APAC include a suite of information technology hardware, software and services solutions. The company's offerings in the remainder of its EMEA and APAC segments are primarily software and certain software-related services.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
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