Luxoft Holding, Inc.: Gathering momentum, can it sustain its performance?

Luxoft Holding, Inc. relative valuation is OVERVALUED and it has a fundamental analysis score of 69.

Our analysis is based on comparing Luxoft Holding, Inc. with the following peers – Computer Sciences Corporation, EPAM Systems, Inc., Infosys Limited Sponsored ADR, Accenture Plc and Cognizant Technology Solutions Corporation Class A (CSC-US, EPAM-US, INFY-US, ACN-US and CTSH-US).

Luxoft Holding, Inc. has shown underwhelming performance over the last one year while growing strongly over the last month. Luxoft Holding, Inc.’s price momentum over the last month, at 3.20% has been better than that over the last year, which was -27.87%. Also from a peer group perspective, Luxoft Holding, Inc. has performed better, since the peer group performance was 2.54% over the last month.

Company Snapshot

  • Compared to peers, relative underperformance over the last year is in contrast with the more recent outperformance.
  • Luxoft Holding, Inc. Class A’s current Price/Book of 3.37 is about median in its peer group.
  • The market expects LXFT-US to grow at about the same rate as the peers and to maintain the median returns it currently generates.
  • LXFT-US‘s median net profit margins and relatively high asset efficiency give it some operating leverage.
  • 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.
  • Over the last five years, LXFT-US‘s return on assets has declined from above median to about median among its peers, indicating declining relative operating performance.
  • The company’s median gross margin and relatively low pre-tax margin suggest high operating costs versus peers.
  • While LXFT-US‘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.
  • LXFT-US has the financial and operating capacity to borrow quickly.
  • Our analysis rates Luxoft Holding, Inc. as OVERVALUED relative to its peers.

Share Price Performance

Compared to peers, relative underperformance over the last year is in contrast with the more recent outperformance.

LXFT-US‘s share price performance of -27.87% over the last 12 months is below its peer median but its 30-day trend in share price performance of 3.20% is better than the peer median. This recent rising stock price may herald a change in relative share price performance.

Share Price Performance

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Leading, Fading, Lagging, Rising

Relative Valuation

Relative Valuation
Fundamental Score

Luxoft Holding, Inc.’s price of USD 54.25 is greater than CapitalCube’s implied price of USD 45.31. At this level, CapitalCube believes that Luxoft Holding, Inc. is overvalued. Over the last 52 week period, the stock has fluctuated between USD 46.58 and USD 80.64.

Valuation & Peer Metrics

A complete list of valuation metrics is available on the company page.

Company Profile

Luxoft Holding, Inc. operates as a provider of software development services and information technology solutions to a global client base consisting of multinational corporations. The company’s services include software development and support, product engineering and testing, and technology consulting. It provides its services to six industry verticals: Financial services, Travel and aviation, Technology, Telecom, Automotive and transport and Energy. The company was founded in March 2000 and is headquartered in Zug, Switzerland.

Disclaimer

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