SSNC - Embedded Expectations Analysis - 2020 06 08
SS&C Technologies Holdings, Inc. (SSNC:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) earnings, with a 15.5x Uniform P/E, implying bearish expectations for the firm. Although management's concerns about their debt, growth, and broad economic recovery suggest the potential for near-term headwinds, market expectations are overly bearish, suggesting long-term equity upside is likelySpecifically, management may have concerns about their ability to pay down debt in 2021, their secured net leverage ratio, and the sustainability of rising outsourcing service demand and lower credit facility interest rates. In addition, they may lack confidence in their ability to drive Innovest revenue growth, sustain adjusted operating margin growth, and ensure near-term liquidity through recent revolver borrowings. Moreover, they may be exaggerating their focus on client service, the likelihood of a full economic recovery before year end, and their SightLine platform's data model enhancement capabilities
Although management's concerns about their debt, growth, and broad economic recovery suggest the potential for near-term headwinds, given the firm's dominant market position, market expectations are overly bearish. As such, long-term outperformance is likely warranted for SSNC
SS&C Technologies Holdings is a holding company. Through its subsidiaries, the company is a provider of software products and software-enabled services that allow financial services providers to automate business processes and manage their information processing requirements. The company provides its solutions to clients principally within the institutional asset and wealth management, alternative investment management, financial advisory and financial institutions vertical markets. In addition, the company's clients include commercial lenders, real estate investment trusts, corporate treasury groups, insurance and pension funds, municipal finance groups and real estate property managers.
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