TXT e solutions SPA (TXT) AI Stock Analysis

• Market Cap: €385.82M
• Dividend Yield: 0.76%
• Average Volume (3M): 16.16K
• Price to Earnings (P/E): 24.0
• Beta (1Y): 0.69
• Revenue Growth: 37.78%
• EPS Growth: -3.90%
• Country: IT
• Employees: 3,282
• Sector: Technology
• Sector Strength: 91
• Industry: Software - Application
• EPS (TTM): 0.40
• Shares Outstanding: 13,006,250
• 10 Day Avg. Volume: 17,706
• 30 Day Avg. Volume: 16,163
• PEG Ratio: N/A
• Price to Book (P/B): 0.00
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: €47.40
• Price Target Upside: 44.51% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 1

• Rating: 66 Neutral
• Price Target: €36.00 ▲(9.76%Upside)

TXT e solutions SPA's stock score of 66.1 reflects robust financial performance and sound financial management. However, technical indicators suggest a bearish trend, and the stock's valuation appears high relative to its peers. Investors should be cautious due to potential overvaluation and bearish technical signals, despite strong financials.

Positive Factors

Market Positioning

Inclusion in the FTSE Italia Mid Cap index is expected to provide a positive catalyst for the stock, potentially boosting its profile among investors.

Revenue Growth

Preliminary FY24 revenues showed strong growth, up 35% YoY, particularly driven by the Digital Advisory segment, which continued double-digit growth despite challenging comparisons.

Stock Valuation

The target price has been revised upward significantly from Eu34.7 to Eu45.0, reflecting greater mid-term visibility on a solid organic multi-year growth path.

Negative Factors

EBITDA Margin

EBITDA for 4Q24 was below expectations, which was attributed to investments supporting growth and a change in revenue mix, leading to slightly lower percentage margins.

Investment Impact

EBITDA margin narrowed by c.110bps to 13% driven by increased investments and a series of low-margin contracts in the Software Engineering segment.

TXT e solutions SPA Business Overview & Revenue Model

Company Description

TXT e-solutions S.p.A., together with its subsidiaries, provides software and service solutions in Italy and internationally. It operates in two segments: Aerospace, Aviation & Transportation; and Fintech. The Aerospace, Aviation & Transportation segment offers on-board software, flight simulators, training systems, flight support systems, and manufacturing solutions; and specialized engineering services to aerospace companies and airline operators. Its customers comprise manufacturers of aircraft and engines, airlines, and civil and defense operators, as well as maintenance, repair, and overhaul companies. The Fintech segment provides solutions for the nonperforming loans, digital payments, factoring, compliance, and supply chain finance market; financial applications for banks and financial companies; solutions for risk management; technological and consulting services; and information and communications technology services to the bank sector. The company was formerly known as TXT Ingegneria Informatica S.p.A. and changed its name to TXT e-solutions S.p.A. in March 2000. TXT e-solutions S.p.A. was founded in 1989 and is headquartered in Cologno Monzese, Italy.

How the Company Makes Money

TXT e-solutions SPA generates revenue through multiple streams, primarily by delivering specialized software solutions and consulting services tailored to the needs of its clients in the aerospace, automotive, and industrial sectors. The company earns money by developing bespoke software applications, offering IT consultancy, and providing systems integration services that help clients improve their business processes and technology infrastructure. Additionally, TXT engages in long-term contracts with businesses, ensuring recurring revenue through software maintenance and support services. Strategic partnerships and collaborations with leading technology providers also contribute to its revenue by expanding its market reach and enhancing its service offerings.

TXT e solutions SPA Financial Statement Overview

Summary

TXT e solutions SPA demonstrates strong revenue growth and profitability with healthy margins. The balance sheet is stable with a manageable debt-to-equity ratio. Positive cash flow growth supports investments and shareholder value. Monitoring debt levels and capital investments is crucial for sustained growth.

Income Statement

TXT e solutions SPA shows strong revenue growth with a significant increase from 2024 to TTM, indicating robust demand for its services. The company maintains healthy gross and net profit margins, which are indicative of effective cost management and profitability. EBIT and EBITDA margins further support the company's operational efficiency. However, the outstanding performance in Gross Profit Margin in earlier years has normalized to industry levels, which could be a point for further improvement.

Balance Sheet

The balance sheet of TXT e solutions SPA indicates a stable financial position with a manageable debt-to-equity ratio, suggesting a balanced approach to leveraging. Return on Equity is solid, reflecting the company's effective use of shareholders' funds to generate profits. The equity ratio is decent, showing a fair amount of the company’s assets are financed by equity, which provides a cushion against liabilities. The company's increasing assets and equity over the years are positive, though the rise in total liabilities warrants monitoring.

Cash Flow

The cash flow analysis reveals positive free cash flow growth, supporting the company's ability to invest and return value to shareholders. The operating cash flow to net income ratio is healthy, indicating good cash conversion. The company has consistently managed to generate free cash flow, showcasing effective capital expenditure management. However, fluctuations in investing cash flow suggest variable capital investments which should be monitored for long-term sustainability.

Breakdown	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	304.54M	224.39M	150.76M	96.36M	68.75M
Gross Profit	76.28M	35.20M	109.32M	75.60M	55.19M
EBITDA	38.27M	35.80M	24.60M	15.31M	9.74M
Net Income	15.90M	15.51M	11.99M	7.87M	4.47M
Balance Sheet
Total Assets	448.38M	302.24M	300.78M	226.06M	173.45M
Cash, Cash Equivalents and Short-Term Investments	75.53M	61.99M	81.50M	84.37M	80.09M
Total Debt	183.03M	108.80M	114.53M	87.95M	52.42M
Total Liabilities	296.55M	188.37M	191.40M	132.99M	87.58M
Stockholders Equity	149.76M	113.85M	109.37M	92.65M	85.45M
Cash Flow
Free Cash Flow	16.66M	8.03M	16.37M	7.07M	-2.31M
Operating Cash Flow	26.76M	22.19M	18.16M	8.53M	-1.16M
Investing Cash Flow	-49.02M	11.09M	-32.48M	-10.27M	7.14M
Financing Cash Flow	42.64M	-28.77M	11.01M	25.88M	-5.46M

TXT e solutions SPA Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 32.80
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For IT:TXT, the sentiment is Negative. The current price of 32.8 is below the 20-day moving average (MA) of 34.15, below the 50-day MA of 34.54, and below the 200-day MA of 34.17, indicating a bearish trend. The MACD of -0.39 indicates Positive momentum. The RSI at 38.25 is Neutral, neither overbought nor oversold. The STOCH value of 52.64 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for IT:TXT.

TXT e solutions SPA Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TXT	66 Neutral	€385.82M	24.03	12.37%	0.76%	37.78%	-3.90%
Sector *	62 Neutral	£521.99M	21.49	-8.07%	2.77%	3.30%	-18.10%
7GV	―	€315.15M	―	-8.20%	―	―	―
7T4	―	€663.14M	70.88	1.04%	1.36%	―	―
101	―	€91.15M	10.32	11.71%	―	―	―
9PC	―	€426.28M	42.30	25.87%	1.91%	―	―
DGV	81 Outperform	€278.98M	7.88		2.84%	-3.76%	-9.21%