GFT Technologies AG – Value Analysis (XETRA:GFT) : December 26, 2017

Capitalcube gives GFT Technologies AG a score of 81.

Our analysis is based on comparing GFT Technologies AG with the following peers – Pironet AG, REALTECH AG, SEVEN PRINCIPLES AG, Allgeier SE and ifa systems AG (PNG-DE, RTC-DE, T3T1-DE, AEIN-DE and IS8-DE).

Investment Outlook

GFT Technologies AG has a fundamental score of 81 and has a relative valuation of NEUTRAL.

Fundamental Score

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Company Overview

  • Compared to peers, relative underperformance over the last year is in contrast with the more recent outperformance.
  • It’s current Price/Book of 2.85 is about median in its peer group.
  • GFT-DE‘s operating performance is relatively good compared to its peers. The market currently does not expect high earnings growth relative to its peers but seems to expect the company to maintain its relatively high rates of return.
  • GFT-DE has relatively high profit margins while operating with median asset turns.
  • Changes in annual revenues (relative to peers) are better than the change in its earnings (relative to peers), implying the company is focused more on revenues.
  • GFT-DE‘s return on assets currently and over the past five years suggest that its relatively high operating returns are sustainable.
  • The company’s relatively high gross and pre-tax margins suggest a differentiated product portfolio and tight control on operating costs relative to peers.
  • While GFT-DE‘s revenues in recent years have grown faster than the peer median, the market gives the stock a P/E ratio that is around peer median suggesting that the market has some questions about the company’s long-term strategy.
  • The company’s level of capital investment seems appropriate to support the company’s growth.
  • GFT-DE has additional debt capacity.

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Leverage & Liquidity

GFT-DE has additional debt capacity.

  • With debt at a reasonable 21.80% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 5.31%), and a well-cushioned interest coverage level of 15.76x, GFT-DE has the capacity to borrow some more.
  • Of the 5 chosen peers for the company, only 4 of the stocks have an outstanding debt balance. Companies with no debt include PNG-DE.

GFT-DE has moved to a relatively high liquidity from an Quick & Able profile at the recent year-end.

  • GFT-DE‘s interest coverage is its lowest relative to the last five years and compares to a high of 2,097.50x in 2012.
  • The decrease in its interest coverage to 15.76x from 17.48x (in 2016) was also accompanied by a decrease in its peer median during this period to -3.04x from 0.60x.
  • Interest coverage rose 1.91 points relative to peers. It is also above the 2.50x coverage benchmark unlike the peer median.
  • GFT-DE‘s debt-EV is its highest relative to the last five years and compares to a low of 0% in 2012.
  • While its debt-EV increased to 21.80% from 17.94% (in 2016), its peer median decreased during this period to 5.31% from 11.05%.
  • Relative to peers, debt-EV rose 9.60 percentage points.

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Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Pironet AG 0 4.52 No interest exp 999
REALTECH AG -504.76 1.74 -8.96 -2.84
SEVEN PRINCIPLES AG 4.16 1.13 -9.12 -633.86
Allgeier SE 39.21 1.71 2.89 17.38
ifa systems AG 6.45 0.9 -131.77 -26.63
GFT Technologies AG 21.8 1.35 15.76 30.99
Peer Median 5.31 1.53 -3.04 7.27
Best In Class -504.76 4.52 No interest exp 999

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Company Profile

GFT Technologies AG engages in the provision of information technology (IT) solutions and services. The firm is an aligned technology partner for Digital Transformation in the financial services industry. Its clients include leading retail and investment banks in Europe, as well as in North and South America. It operates through the following geographical segments: Americas & UK, Continental Europe, and Others. The company was founded by Ulrich Dietz in 1987 and is headquartered in Stuttgart, Germany.

Disclaimer

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