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Enghouse Systems (TSE:ENGH)
TSX:ENGH
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Enghouse Systems
(TSX:ENGH)
76Outperform
Enghouse Systems (ENGH) vs. S&P 500 (SPY)
Market Cap
$1.32B
Dividend Yield4.51%
Average Volume (3M)116.93K
Price to Earnings (P/E)15.6
Beta (1Y)0.46
Revenue Growth8.11%
EPS Growth15.83%
CountryCA
Employees1,932
SectorTechnology
Sector Strength40
IndustrySoftware - Application
Share Statistics
EPS (TTM)1.54
Shares Outstanding55,155,490
10 Day Avg. Volume135,267
30 Day Avg. Volume116,931
Financial Highlights & Ratios
PEG Ratio0.99
Price to Book (P/B)N/A
Price to Sales (P/S)2.90
Price to Cash Flow (P/CF)17.20
P/FCF Ratio17.50
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$30.00Price Target Upside24.91% Upside
Rating ConsensusHold
Number of Analyst Covering1
Enghouse Systems Business Overview & Revenue Model
Company DescriptionEnghouse Systems Limited is a Canadian-based software and services company that operates in the vertical market software sector. The company specializes in providing enterprise software solutions focused on contact centers, video communications, and visual computing solutions for a range of industries including telecommunications, utility, and finance. Enghouse offers a variety of products including customer interaction management, geographic information systems (GIS), and business process automation tools.
How the Company Makes MoneyEnghouse Systems makes money primarily through the sale of software licenses, maintenance and support services, and professional services. The company's revenue streams include subscription-based licensing fees, one-time software sales, and recurring maintenance and support contracts. Additionally, Enghouse generates income from professional services such as consulting, training, and implementation support. The company often engages in long-term contracts with clients, providing stable and predictable revenue. Partnerships with key technology providers and resellers also play a significant role in expanding their market reach and enhancing their sales channels.
Enghouse Systems Financial Statement Overview
Summary
Enghouse Systems presents strong financial performance with impressive profitability margins and a robust balance sheet. Its revenue growth is modest, but the company maintains a solid cash flow position and low leverage, reflecting operational efficiency and stability.Income Statement
Enghouse Systems shows strong profitability with a gross profit margin of 62.1% and a net profit margin of 16.8% in the TTM (Trailing-Twelve-Months). The company has maintained stable EBIT and EBITDA margins of 22.3% and 29.8% respectively. Although revenue growth is modest at 0.7%, the company has demonstrated consistent profitability over the years.78
Positive
Balance Sheet
The balance sheet of Enghouse Systems is solid, with a low debt-to-equity ratio of 0.019, indicating minimal leverage. Return on equity stands at a healthy 14.0%, and the equity ratio is robust at 70.2%, showcasing financial stability and a strong equity base.83
Very Positive
Cash Flow
Enghouse Systems exhibits a strong cash flow position, with a slight growth in free cash flow by 1.0%. The operating cash flow to net income ratio is 1.57, highlighting efficient cash generation relative to net income. The free cash flow to net income ratio stands at 1.54, reflecting strong cash flow conversion.81
Very Positive
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 506.02M | 502.50M | 454.02M | 427.58M | 467.18M | 503.78M | Gross Profit |
| 314.28M | 326.92M | 304.02M | 297.49M | 337.55M | 358.60M | EBIT |
| 112.74M | 133.85M | 122.11M | 95.42M | 111.40M | 124.90M | EBITDA |
| 150.83M | 150.66M | 136.90M | 143.79M | 163.33M | 180.67M | Net Income Common Stockholders |
| 85.10M | 81.33M | 72.25M | 94.50M | 92.79M | 98.59M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 271.09M | 274.73M | 240.36M | 228.05M | 198.83M | 251.79M | Total Assets |
| 865.39M | 833.49M | 783.67M | 705.00M | 674.62M | 763.65M | Total Debt |
| 11.50M | 11.09M | 12.40M | 19.88M | 25.60M | 42.16M | Net Debt |
| -258.81M | -263.15M | -227.13M | -205.23M | -170.29M | -202.64M | Total Liabilities |
| 258.29M | 237.69M | 228.34M | 196.83M | 220.31M | 267.32M | Stockholders Equity |
| 607.10M | 595.81M | 555.33M | 508.17M | 454.31M | 496.32M |
| Cash Flow | Free Cash Flow | ||||
| 131.40M | 130.09M | 114.24M | 102.26M | 115.13M | 165.60M | Operating Cash Flow |
| 133.42M | 132.07M | 115.30M | 103.18M | 118.46M | 168.15M | Investing Cash Flow |
| -52.05M | -45.25M | -57.23M | -21.09M | -37.62M | -45.07M | Financing Cash Flow |
| -69.35M | -57.08M | -51.78M | -54.87M | -119.51M | -22.32M |
Enghouse Systems Technical Analysis
Negative
24.02
Price Trends
26.53
Negative
27.37
Negative
28.70
Negative
Market Momentum
-0.12
Positive
42.48
Neutral
21.71
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:ENGH, the sentiment is Negative. The current price of 24.02 is below the 20-day moving average (MA) of 25.99, below the 50-day MA of 26.53, and below the 200-day MA of 28.70, indicating a bearish trend. The MACD of -0.12 indicates Positive momentum. The RSI at 42.48 is Neutral, neither overbought nor oversold. The STOCH value of 21.71 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:ENGH.
Enghouse Systems Peers Comparison
Overall Rating
UnderperformOutperform
Sector (57)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $1.32B | 15.62 | 14.76% | 4.51% | 8.11% | 15.83% | |
75 Outperform | C$2.93B | 36.44 | 7.09% | ― | 33.74% | 61.09% | |
69 Neutral | $9.07B | 10.17 | 16.00% | 4.29% | -3.59% | 432.46% | |
68 Neutral | C$4.45B | 157.81 | -0.10% | ― | 14.85% | -105.25% | |
68 Neutral | C$176.36M | ― | -1.93% | 0.53% | -13.99% | -421.95% | |
63 Neutral | C$92.50B | 92.37 | 30.90% | 0.13% | 21.56% | 31.90% | |
57 Neutral | $18.54B | 9.84 | -14.38% | 2.71% | 5.07% | -23.65% |
* Technology Sector Average
Performance Comparison
TSE:ENGH
Enghouse Systems
24.02
-4.73
-16.44%
TSE:OTEX
Open Text
34.34
-14.29
-29.39%
TSE:KXS
Kinaxis Inc
158.26
6.37
4.19%
TSE:SYZ
Sylogist
7.54
-1.90
-20.13%
TSE:CSU
Constellation Software
4,365.01
731.77
20.14%
TSE:MDA
MDA Ltd
24.02
9.58
66.34%
Enghouse Systems Earnings Call Summary
Earnings Call Date: Mar 10, 2025 | % Change Since: -9.08% | Next Earnings Date: Jun 5, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted modest revenue and net income growth, strategic acquisitions, and a strong cash position, indicating a stable financial situation. However, challenges such as a decrease in operating activities, adjusted EBITDA decline, and industry-wide uncertainties present notable hurdles. The sentiment remains balanced as the company shows resilience through strategic initiatives despite facing some operational and market challenges.Highlights
Revenue Growth
Revenue increased 2.9% to $124 million from $120.5 million in Q1 2024.
Increase in Recurring Revenue
Recurring revenue, including SaaS and maintenance services, grew 4% to $87.9 million compared to $84.6 million in Q1 2024.
Net Income Growth
Net income increased to $21.9 million from $18.1 million in Q1 2024.
Strong Cash Position
Cash flow from operating activities was $37.7 million compared to $35.6 million in the prior year, with cash reserves at $271.1 million.
Strategic Acquisitions
Acquisitions of Aculab and Margento to enhance product offerings and expand market presence.
Dividend Increase
Increase of 15.4% in the quarterly dividend to $0.30 per common share, marking the 17th consecutive year of dividend increases.
Lowlights
Decrease in Operating Activities
Results from operating activities decreased to $31 million compared to $32.6 million in Q1 2024.
Adjusted EBITDA Decline
Adjusted EBITDA decreased to $33.1 million compared to $34.7 million.
Industry Challenges
Global uncertainty impacting trade flows and interest rates; slow transition from 4G to 5G affecting the network side.
IMG Revenue Decline
Revenue decline in the Interactive Management Group segment, partly due to the churn at Lifesize and market uncertainties.
Company Guidance
During Enghouse's First Quarter 2025 Conference Call, the company reported a 2.9% increase in revenue, reaching $124 million, compared to the same period in 2024. Recurring revenue, primarily from SaaS and maintenance services, grew by 4% to $87.9 million, making up 70.9% of the total revenue. Net income rose to $21.9 million, or $0.40 per diluted share, up from $18.1 million, or $0.33 per diluted share, in Q1 2024. Despite a decrease in adjusted EBITDA to $33.1 million, a 26.7% margin was maintained. Enghouse's cash flow from operating activities, excluding changes in working capital, was $37.7 million, with cash reserves at $271.1 million by January 31, 2025. The company completed the acquisition of Aculab PLC and Margento R&D d.o.o., enhancing its product offerings and expanding its European market presence. A 15.4% increase in the quarterly dividend to $0.30 per share was approved, demonstrating a continued focus on profitability and shareholder returns.Enghouse Systems Corporate Events
Shareholder MeetingsBusiness Operations and Strategy
Enghouse Systems Elects Directors at Annual Meeting
Positive
Mar 12, 2025
Enghouse Systems Limited announced the results of its annual shareholders’ meeting, where all nominated directors were elected. The meeting, held virtually, saw high approval rates for the directors, reflecting strong shareholder support and potentially reinforcing the company’s strategic direction and governance stability.
M&A TransactionsDividendsBusiness Operations and StrategyFinancial Disclosures
Enghouse Systems Reports Q1 Revenue Growth and Strategic Acquisitions
Positive
Mar 10, 2025
Enghouse Systems Limited reported a 2.9% increase in revenue to $124.0 million for the first quarter of 2025, with net income rising by 20.8% to $21.9 million. The company continues to focus on recurring revenue streams, particularly through SaaS and maintenance services, while strategically balancing on-premise and cloud solutions. Enghouse’s acquisition of Aculab PLC and Margento R&D d.o.o. strengthens its offerings in communication, security, and transportation sectors. Despite global uncertainties, Enghouse maintains a strong cash position and has increased its quarterly dividend by 15.4%, reflecting its commitment to long-term profitability and shareholder returns.
M&A TransactionsBusiness Operations and Strategy
Enghouse Systems Expands Transit Solutions with Margento Acquisition
Positive
Mar 4, 2025
Enghouse Systems Limited has acquired Margento R&D, a Slovenian company specializing in transit fare collection and mobile payment solutions. This acquisition aims to expand Enghouse’s European fare collection business and enhance its offerings with Margento’s advanced account-based ticketing and mobile ticketing solutions. The integration of Margento’s scalable Mobility as a Service platform is expected to create synergies and strengthen Enghouse’s market position in the transit sector, benefiting stakeholders including customers, partners, and employees.
Financial Disclosures
Enghouse Systems to Announce Q1 2025 Results
Neutral
Mar 3, 2025
Enghouse Systems Limited announced its plan to release its first quarter fiscal 2025 results on March 10, 2025, followed by a conference call on March 11, 2025, to discuss the results. This announcement is significant as it provides stakeholders with an opportunity to gain insights into the company’s financial performance and strategic direction for the upcoming year.
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.