SNP Schneider-Neureither & Partner SE – Value Analysis (XETRA:SHF) : December 26, 2017

Capitalcube gives SNP Schneider-Neureither & Partner SE a score of 75.

Our analysis is based on comparing SNP Schneider-Neureither & Partner SE with the following peers – NEXUS AG, SEVEN PRINCIPLES AG, OTRS AG, ifa systems AG and Integrata AG (NXU-DE, T3T1-DE, TR9-DE, IS8-DE and ITR-DE).

Investment Outlook

SNP Schneider-Neureither & Partner SE has a fundamental score of 75 and has a relative valuation of NEUTRAL.

Fundamental Score

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Company Overview

  • Considering peers, relative underperformance over the last year and the last month suggest a lagging position.
  • It trades at a lower Price/Book multiple (2.74) than its peer median (4.24).
  • SHF-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.
  • SHF-DE‘s relatively high profit margins are burdened by relative asset inefficiency.
  • The company’s year-on-year change in revenues and earnings are better than the median among its peer group.
  • SHF-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 margin suggests some differentiation with pricing advantages versus peers.
  • While SHF-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.
  • SHF-DE‘s operating performance may not allow it to raise additional debt.

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Leverage & Liquidity

SHF-DE would seem to have a hard time raising additional debt.

  • With debt at 21.31% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 2.08%), and relatively tight interest coverage level of 0.46x, SHF-DE would have a hard time raising much additional debt.
  • Of the 5 chosen peers for the company, only 2 of the stocks have an outstanding debt balance (including T3T1-DE and IS8-DE). Companies with no debt include NXU-DE, TR9-DE and ITR-DE.

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

  • SHF-DE‘s interest coverage is downward trending and is below (but within one standard deviation of) its five-year average interest coverage of 198.32x.
  • While its interest coverage decreased to 0.46x from 5.35x (in 2016), its peer median increased during this period to 10.05x from 4.95x.
  • Interest coverage fell 10.00 points relative to peers (and is now lower than its peer median). It is also below the 2.50x coverage benchmark unlike the peer median.
  • SHF-DE‘s debt-EV is its highest relative to the last five years and compares to a low of 0% in 2012.
  • The increase in its debt-EV to 21.31% from 7.17% (in 2016) was also accompanied by an increase in its peer median during this period to 2.08% from 0.62%.
  • Relative to peers, debt-EV rose 12.69 percentage points.

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Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
NEXUS AG 0 1.81 172.27 999
SEVEN PRINCIPLES AG 4.16 1.13 -9.12 -633.86
OTRS AG 0 0.52 19.65 168.5
ifa systems AG 6.45 0.9 -131.77 -26.63
Integrata AG 0 1.23 No interest exp 999
SNP Schneider-Neureither & Partner SE 21.31 1.86 0.46 -2.76
Peer Median 2.08 1.18 10.05 82.87
Best In Class 4.16 1.86 No interest exp 999

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Company Profile

SNP Schneider-Neureither & Partner SE provides software and software-related services. It operates through two business segments: Software and Professional Services. The Software segment engages in the development and marketing of in-house software solution for ERP transformations, such as SNP Transformation Backbone, the translation software SNP Dragoman and the SNP Data Provisioning and Masking software for migration and secure masking of productive ERP data for tests, training and quality assurance. The Professional Services segment includes consulting in the event of changes in the business areas, which include business landscape transformation and business landscape management. The company was founded by Andreas Schneider-Neureither and Petra Neureither in 1994 and is headquartered in Heidelberg, Germany.

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