Amdocs (DOX) AI Stock Analysis

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Amdocs

(NASDAQ:DOX)

71Outperform

Amdocs presents a solid financial and operational profile, with strong profitability and strategic growth initiatives in AI and cloud services. Although technical indicators show mixed signals and macroeconomic challenges persist, the company's fair valuation and positive earnings outlook support a favorable stock score.

Positive Factors

Cloud Growth

Cloud initiatives continue to generate most of the growth, with cloud accounting for over 25% of revenues and growing at a double-digit rate.

Financial Performance

Operating margin of 21.2% increased by 310 basis points year-over-year, driven by the phasing out of non-core businesses and operating efficiencies.

Revenue Visibility

Backlog increased by $80 million quarter-over-quarter and 3.5% year-over-year on a pro forma constant currency basis, providing nearly 90% visibility for next year's revenues.

Negative Factors

Industry Challenges

The company noted continued industry spending challenges, contributing to a challenging core underlying growth.

Macro Environment

There has been no significant shift in the sluggish business trends, and the company is still experiencing an unfavorable macro environment.

Revenue Headwind

The business will face lower growth and a $600 million revenue headwind due to the discontinuation of low-margin businesses.

Amdocs (DOX) vs. S&P 500 (SPY)

Market Cap

$10.03B

Dividend Yield2.21%

Average Volume (3M)798.55K

Price to Earnings (P/E)20.6

Beta (1Y)0.59

Revenue Growth-1.55%

EPS Growth-7.26%

CountryUS

Employees29,058

SectorTechnology

Sector Strength69

IndustrySoftware - Infrastructure

Share Statistics

EPS (TTM)4.34

Shares Outstanding112,163,000

10 Day Avg. Volume630,384

30 Day Avg. Volume798,548

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.00

Price to Cash Flow (P/CF)0.00

P/FCF Ratio0.00

Enterprise Value/Market Cap0.99

Enterprise Value/RevenueN/A

Enterprise Value/Gross Profit5.68

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$103.67

Price Target Upside15.97% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering3

Amdocs Business Overview & Revenue Model

Company DescriptionAmdocs Limited, a leading multinational corporation, specializes in software and services for communications, media, and financial services providers. Headquartered in Chesterfield, Missouri, the company offers a wide range of solutions, including customer experience systems, operational support systems, network and service management, and digital services. Amdocs empowers its clients to streamline operations, improve customer engagement, and drive innovation through its comprehensive suite of products and services.

How the Company Makes MoneyAmdocs generates revenue primarily through the sale of software and services to communications and media companies. The company earns money from licensing its software solutions, providing managed services, and offering support and maintenance. Additionally, Amdocs capitalizes on long-term contracts and strategic partnerships with key industry players, which often include multi-year service agreements. These partnerships and contracts ensure a steady flow of income, enabling Amdocs to maintain a robust financial performance. The company's revenue streams are further diversified by its expansion into digital and cloud-based services, which cater to the evolving needs of its clients.

Amdocs Financial Statement Overview

Summary

Amdocs maintains a strong financial position with robust profitability and stability across its income statement, balance sheet, and cash flow metrics. The company exhibits commendable cost management and cash flow conversion, though it faces challenges in sustaining revenue growth.

Income Statement

Positive

Amdocs shows a robust financial performance with a consistent increase in revenue over the years. The TTM Gross Profit Margin of 35.64% and Net Profit Margin of 10.19% reflect efficient cost management and profitability. However, there is a slight decline in revenue from the previous year, indicating potential challenges in maintaining growth momentum.

Balance Sheet

Positive

The company's balance sheet remains solid with a Debt-to-Equity Ratio of 0.23, indicating low leverage and financial stability. The Equity Ratio of 55.05% signifies a strong equity position. A slight decrease in equity from the previous year suggests some caution in asset management or external liabilities impact.

Cash Flow

Positive

Amdocs demonstrates strong cash flow metrics with a Free Cash Flow to Net Income Ratio of 1.12, indicating efficient conversion of income to free cash flow. Despite a decrease in free cash flow growth, the Operating Cash Flow to Net Income Ratio of 1.30 shows solid cash generation capacity.

Sep 2024	Sep 2023	Sep 2022	Sep 2021	Sep 2020
Breakdown
Income Statement		Total Revenue
5.00B	4.89B	4.58B	4.29B	4.17B
	Gross Profit
1.76B	1.73B	1.62B	1.48B	1.41B
	EBIT
628.61M	653.99M	664.80M	372.28M	594.76M
	EBITDA
819.03M	855.15M	889.85M	1.04B	792.16M
	Net Income Common Stockholders
493.20M	540.71M	549.50M	688.37M	497.84M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
514.33M	742.53M	817.98M	965.59M	983.94M
	Total Assets
6.39B	6.43B	6.39B	6.51B	6.34B
	Total Debt
789.74M	807.31M	826.83M	881.17M	1.03B
	Net Debt
443.65M	287.23M	253.45M	172.11M	50.01M
	Total Liabilities
2.89B	2.86B	2.83B	2.88B	2.68B
	Stockholders Equity
3.46B	3.52B	3.52B	3.59B	3.62B
Cash Flow		Free Cash Flow
618.93M	698.27M	529.50M	715.37M	452.63M
	Operating Cash Flow
724.43M	822.63M	756.72M	925.81M	658.14M
	Investing Cash Flow
-127.41M	-224.50M	-262.50M	-329.00M	-461.73M
	Financing Cash Flow
-771.02M	-651.43M	-629.90M	-870.93M	315.14M

Amdocs Technical Analysis

Technical Analysis Sentiment

Positive

Last Price89.39

Price Trends

50DMA

87.07

Positive

100DMA

86.29

Positive

200DMA

85.82

Positive

Market Momentum

MACD

0.41

Negative

RSI

60.85

Neutral

STOCH

92.43

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DOX, the sentiment is Positive. The current price of 89.39 is above the 20-day moving average (MA) of 84.82, above the 50-day MA of 87.07, and above the 200-day MA of 85.82, indicating a bullish trend. The MACD of 0.41 indicates Negative momentum. The RSI at 60.85 is Neutral, neither overbought nor oversold. The STOCH value of 92.43 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for DOX.

Amdocs Risk Analysis

Amdocs disclosed 29 risk factors in its most recent earnings report. Amdocs reported the most risks in the “Tech & Innovation” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Amdocs Peers Comparison

Overall Rating

UnderperformOutperform

Sector (60)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DBX	73 Outperform	$8.24B	20.41	-60.11%	―	1.86%	6.21%
DOX	71 Outperform	$10.03B	20.60	14.13%	2.21%	-1.55%	-7.26%
AKAM	70 Outperform	$12.06B	25.29	10.66%	―	4.70%	-7.33%
KVYO	66 Neutral	$7.40B	―	-4.74%	―	34.29%	86.52%
Sector *	60 Neutral	$10.95B	10.52	-7.07%	3.00%	7.30%	-12.04%
RBRK	53 Neutral	$13.92B	―	218.28%	―	41.19%	-220.59%
SAIL	46 Neutral	$10.41B	―	-11.15%	―	23.16%	-9.81%

* Technology Sector Average

Performance Comparison

DOX

Amdocs

89.39

6.38

7.69%

AKAM

Akamai

82.54

-18.54

-18.34%

DBX

Dropbox

28.61

5.07

21.54%

KVYO

Klaviyo, Inc. Class A

32.83

9.61

41.39%

RBRK

Rubrik, Inc. Class A

73.33

38.46

110.30%

SAIL

SailPoint, Inc.

18.70

-5.85

-23.83%

Amdocs Earnings Call Summary

Earnings Call Date:Feb 04, 2025

(Q1-2025)

% Change Since: 3.51%|

Next Earnings Date:May 07, 2025

Earnings Call Sentiment Positive

The earnings call highlighted solid financial performance with increased profitability and a strong 12-month backlog, driven by growth in cloud services and strategic initiatives in AI. However, challenges such as geopolitical uncertainties and negative currency impacts were noted. The overall sentiment of the call is slightly positive, with optimism about future growth and expansion.

Q1-2025 Updates

Positive Updates

Financial Performance and Growth

First quarter revenue was $1.11 billion, slightly above the midpoint of guidance. Profitability jumped by 310 basis points year-over-year and 250 basis points sequentially. Non-GAAP earnings per share was $1.66, exceeding the midpoint of guidance. 12-month backlog increased by approximately 2.7% from a year ago on a pro forma basis.

Expansion in Cloud and Managed Services

Amdocs expanded activities in North America with AT&T and internationally with VodafoneZiggo and CT Montenegro, securing new deals in cloud operations and modernization. Managed services revenue was $729 million, and the company maintained a renewal rate of close to 100%.

Strategic Initiatives in Generative AI

Amdocs introduced additional copilot capabilities and unveiled enhanced generative AI capabilities. They completed the acquisition of PROFINET, enhancing their data and GenAI services capabilities.

Recognition in Sustainability

Amdocs was included in the 2024 S&P Dow Jones Sustainability Index North America for the sixth year in a row, highlighting their focus on ESG principles.

Negative Updates

Geopolitical and Macroeconomic Challenges

The operating environment remained challenging with elevated macroeconomic, geopolitical, and business uncertainties.

Currency Impact on Financials

Revenue was affected by negative foreign currency movements, impacting the company's financial results and growth metrics.

Slower Growth in Europe

Europe showed weaker performance due to timing differences between the natural roll-off of completed projects and the gradual ramp-up of new deal awards.

Company Guidance

During the Amdocs First Quarter 2025 Earnings Conference Call, the company reported a solid start to the fiscal year with first-quarter revenue reaching $1.11 billion, slightly above the midpoint of their guidance. Profitability improved significantly, with a year-over-year jump of 310 basis points and a sequential increase of 250 basis points, reflecting the phase-out of certain non-core low-margin business activities. Non-GAAP earnings per share exceeded expectations at $1.66, and the company closed Q1 with a healthy 12-month backlog of $4.14 billion, marking an $80 million sequential increase and a 2.7% year-over-year rise on a pro forma basis. Amdocs reiterated its full-year revenue growth guidance of 1% to 4.5% on a pro forma constant currency basis and aims for another year of double-digit growth in cloud services, with a strong sales pipeline and continued investment in generative AI and cloud solutions.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.