Enghouse Systems (ENGH) AI Stock Analysis

• Market Cap: $1.17B
• Dividend Yield: 6.28%
• Average Volume (3M): 223.84K
• Price to Earnings (P/E): 15.6
• Beta (1Y): 0.46
• Revenue Growth: 0.03%
• EPS Growth: -10.21%
• Country: CA
• Employees: 1,932
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Application
• EPS (TTM): 0.31
• Shares Outstanding: 55,086,906
• 10 Day Avg. Volume: 286,534
• 30 Day Avg. Volume: 223,840
• PEG Ratio: 1.64
• Price to Book (P/B): 2.74
• Price to Sales (P/S): 3.25
• P/FCF Ratio: 12.54
• Enterprise Value/Market Cap: 0.86
• Enterprise Value/Revenue: 2.01
• Enterprise Value/Gross Profit: 3.15
• Enterprise Value/Ebitda: 7.46
• 1Y Price Target: $23.66
• Price Target Upside: 13.00% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 3

• Rating: 71 Outperform
• Price Target: C$23.00 ▲(9.84% Upside)

Enghouse Systems' overall stock score is driven by its solid financial performance and attractive valuation, with a strong dividend yield. However, technical indicators suggest bearish momentum, and challenges highlighted in the earnings call, such as revenue declines and restructuring costs, weigh on the score.

Enghouse Systems Business Overview & Revenue Model

Company Description

Enghouse Systems Limited, together with its subsidiaries, develops enterprise software solutions worldwide. It operates through two segments, Interactive Management Group and Asset Management Group. The Interactive Management Group segment provides customer interaction software and services to facilitate remote work, enhance customer service, increase efficiency, and manage customer communications across various types of interactions, including voice, email, web chats, text, and video. Its technologies include contact center, video collaboration, interactive voice response, outbound dialers, attendant console, agent performance optimization, business intelligence, and analytics that deployed in private cloud, multi-tenant cloud, or on-premise environments. This segment serves insurance companies, telecoms, banks, business process service providers, as well as technology and health care companies. The Asset Management Group segment offers a portfolio of software and services to cable operators, network telecommunication providers, media, transit, defense, and public safety companies. This segment's products include network infrastructure, operations support systems, and business support systems, as well as video and cloud TV solutions. This segment also provides fleet routing, dispatch, scheduling, transit e-ticketing and automated fare collection, communications, and emergency control center solutions for the transportation, government, first responders, distribution, and security sectors. Enghouse Systems Limited was incorporated in 1984 and is headquartered in Markham, Canada.

How the Company Makes Money

Enghouse Systems generates revenue primarily through the sale of software licenses, maintenance and support services, and professional services. The company earns substantial income from its subscription-based offerings, particularly in the contact center and customer engagement sectors, where clients pay recurring fees for access to its platforms. Additionally, Enghouse benefits from service agreements that provide ongoing maintenance and updates for its software products. Significant partnerships with telecommunications companies and system integrators enhance its distribution capabilities and contribute to its earnings. The company also engages in strategic acquisitions to expand its product portfolio and market reach, which plays a critical role in driving revenue growth.

Enghouse Systems Financial Statement Overview

Summary

Enghouse Systems maintains a strong financial footing characterized by steady revenue growth, robust profitability margins, and solid cash flow generation. The low leverage and high equity ratio provide a stable financial foundation. Despite some pressures on profitability, the company remains well-positioned in the software application industry, with a focus on sustainable financial management and strategic growth initiatives.

Income Statement

Enghouse Systems shows a stable financial performance with a gross profit margin of 64.1% and a net profit margin of 15.6% for the TTM. The revenue growth rate is modest at 0.5% compared to the previous year, indicating a steady market position. EBIT and EBITDA margins are strong at 22.8% and 28.0%, respectively, reflecting efficient operational management. However, the decline in EBIT and EBITDA from the previous period suggests some pressure on profitability.

Balance Sheet

The balance sheet reveals a robust financial position with a low debt-to-equity ratio of 0.02, showcasing minimal reliance on debt financing. The return on equity is healthy at 13.1%, indicating effective use of shareholder funds. The equity ratio stands at 69.2%, highlighting strong equity financing and asset stability. Continuous improvement in stockholders' equity suggests prudent financial management.

Cash Flow

Enghouse Systems demonstrates solid cash flow management with an operating cash flow to net income ratio of 1.65 and a free cash flow to net income ratio of 1.63 for the TTM. Although the free cash flow growth shows a slight decline of 1.7%, the company maintains a strong cash-generating ability, supporting operational and strategic initiatives.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	500.10M	502.50M	454.02M	427.58M	467.18M	503.78M
Gross Profit	319.27M	326.92M	304.02M	297.49M	337.55M	358.60M
EBITDA	134.53M	150.66M	136.90M	143.79M	163.33M	180.67M
Net Income	75.18M	81.33M	72.25M	94.50M	92.79M	98.59M
Balance Sheet
Total Assets	848.95M	833.49M	783.67M	705.00M	674.62M	763.65M
Cash, Cash Equivalents and Short-Term Investments	271.58M	274.73M	240.36M	228.05M	198.83M	251.79M
Total Debt	10.31M	11.09M	12.40M	19.88M	25.60M	42.16M
Total Liabilities	246.27M	237.69M	228.34M	196.83M	220.31M	267.32M
Stockholders Equity	602.68M	595.81M	555.33M	508.17M	454.31M	496.32M
Cash Flow
Free Cash Flow	114.89M	130.09M	114.24M	102.26M	115.13M	165.60M
Operating Cash Flow	116.59M	132.07M	115.30M	103.18M	118.46M	168.15M
Investing Cash Flow	-35.09M	-45.25M	-57.23M	-21.09M	-37.62M	-45.07M
Financing Cash Flow	-73.36M	-57.08M	-51.78M	-54.87M	-119.51M	-22.32M

Enghouse Systems Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 20.94
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: 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 20.94 is below the 20-day moving average (MA) of 21.46, below the 50-day MA of 22.19, and below the 200-day MA of 24.50, indicating a bearish trend. The MACD of -0.32 indicates Negative momentum. The RSI at 39.23 is Neutral, neither overbought nor oversold. The STOCH value of 34.99 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

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ENGH	71 Outperform	$1.17B	15.60	12.56%	6.28%	0.03%	-10.21%
KXS	70 Outperform	5.05B	145.43	5.61%	―	15.81%	22.17%
OTEX	70 Outperform	13.49B	23.00	11.09%	2.86%	-7.77%	-1.03%
DCBO	68 Neutral	1.16B	39.93	61.75%	―	18.51%	32.49%
TCS	65 Neutral	516.20M	116.53	6.29%	0.98%	4.03%	199.20%
LSPD	53 Neutral	2.27B	-2.56	-44.44%	―	18.75%	-386.84%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%

Enghouse Systems Corporate Events

Enghouse Systems Reports Third Quarter Results Amid Market Challenges

Enghouse Systems Limited reported a slight decline in its third-quarter revenue and net income compared to the previous year, amidst challenging macroeconomic conditions. Despite this, the company maintained a strong cash position with $271.6 million in cash and short-term investments and no external debt. Enghouse is focusing on cost management and strategic acquisitions to drive long-term growth, while continuing to generate positive cash flows and maintaining a significant portion of its revenue from recurring sources.

The most recent analyst rating on (TSE:ENGH) stock is a Hold with a C$26.00 price target. To see the full list of analyst forecasts on Enghouse Systems stock, see the TSE:ENGH Stock Forecast page.

Enghouse Networks Powers JCI’s Neo-Carrier Strategy with Core Messaging Solutions

Enghouse Networks has been selected by Japan Communications Inc. (JCI) to provide its core messaging and security solutions as part of JCI’s Neo-Carrier Strategy. This initiative aims to launch a new mobile service that operates independently from traditional mobile network constraints by integrating voice, SMS, and data connectivity directly with MNO infrastructure. The deployment of Enghouse Networks’ SMS Core System, which includes SMSC, SMS Firewall, and Voicemail, marks a significant milestone for JCI. This system offers high performance, scalability, and compliance with open standards, positioning JCI for future advancements in mobile messaging services.

The most recent analyst rating on (TSE:ENGH) stock is a Buy with a C$43.00 price target. To see the full list of analyst forecasts on Enghouse Systems stock, see the TSE:ENGH Stock Forecast page.