PTC - Embedded Expectations Analysis - 2019 09 09
PTC Inc. (PTC:USA) currently trades well above corporate averages relative to UAFRS-based (Uniform) Earnings, with a 33.8x Uniform P/E, implying bullish expectations for the firm. However, management may be concerned about growth, meeting guidance, and their sales strategy.Specifically, management may be concerned about the sustainability of recent bookings growth headwinds, and may lack confidence in their ability to generate value for their customers and shareholders. Furthermore, they may be exaggerating the value of their AR products, and may be downplaying the impact VPA renewals and conversions has on their CAD and PLM business. Additionally, they may lack confidence in their ability to meet their EPS, revenue, and free cash flow guidance. Finally, they may lack confidence in their ability to transition to a recurring revenue software strategy, and may be concerned about the sustainability of their operating margin growth.
PTC is a software and services company. The company's products and services include: 3D Modeling, which enables users to create designs, analyze designs, perform engineering calculations and utilize the information created downstream using 2D, 3D, parametric and direct modeling; Lifecycle Management, which enables product data management, as well as communication and collaboration across the enterprise, including product development, manufacturing and the supply chain; Data Orchestration, which delivers tools, technologies, and solutions that enable companies to develop and deploy industrial IoT applications; and Experience Creation, which provides a way to capture, create, and deliver content.
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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