New with WAAAX Stocks - The Resurgence or Fall

  • Dec 12, 2019 AEDT
  • Team Kalkine
New with WAAAX Stocks - The Resurgence or Fall

WAAAX stocks are popular among Australian investors for their capability to create remarkable returns.

The word WAAAX is an acronym where "W" stands for WiseTech Global Limited (ASX: WTC), "A" for Appen Limited (ASX: APX), the next “A” stands for Altium Limited (ASX: ALU), and the last "A" for Afterpay Touch Group Limited (ASX: APT), and finally "X", represents Xero Limited (ASX: XRO).

On a year-to-date (YTD) basis, WiseTech, Appen and Altium have posted a gain of 46.45%, 73.20% and 60.43%, respectively. Afterpay and Xero have gained 145.58% and 90.97%, respectively, during the same period. The S&P/ASX 200 Information Technology Index and the S&P/ASX 200 Index rallied 30.9% and 18.8%, respectively, in the YTD period.

The share price of all WAAAX stocks has shown tremendous growth opportunity, which increases optimism in the stocks and indicates future growth prospects.

(Source: Company Report)

WAAAX: Digging into the Details

WiseTech Global Limited

WiseTech Global is a provider of cloud software solutions to the logistics industry both overseas and domestically. The company’s leading product, “CargoWise One”, offers end-to-end logistics solution, and forms an important part of the supply chain worldwide.

WiseTech Buys Ready Korea

On 10 December 2019, WiseTech stated that it had acquired Ready Korea, a South Korean customs and trade compliance solutions provider.

The acquisition of Ready Korea’s logistics solution and Customs Service will aid WiseTech to develop and enhance its innovation and growth abilities in this key region, hence strengthening the company’s customs footprint worldwide.

Taking a Tour to Analyse the Results

The company has recently provided the financial results for the fiscal year ended 30 June 2019, and some of the highlights are as mentioned below:

Revenues of the company during the period increased by ~57% year over year and came in at $348.3 million. NPAT came in at $54.1million, up ~33% year over year. The increase was backed by robust growth across the business, along with enhancement of CargoWise One product platform. Synergies from Ulukom, Fenix, Taric, DataFreight and Panalpina acquisition also positively impacted the results. EBITDA came in at $108.1 million, up 39% year over year. The company paid a fully franked final dividend of 1.95 cents per share in FY19.

Financial Highlights (Source: Company Report)

Outlook

The company provided its outlook for FY20. WiseTech continues to expect revenue in the range of $440 million – $460 million, representing a growth of 26% -32% over FY19. EBITDA is expected to be in the range of $145 million – $153 million, representing a growth of 34% – 42% y/y.

Stock Performance

WiseTech has a market cap of $7.94 billion, with ~ 318.19 million outstanding shares. The WiseTech stock closed at $24.550 on 12 December 2019, down by 1.564% relative to the previous close.

Appen Limited

Appen Limited is a global IT company. It provides data based solution which are used for machine learning and AI (artificial intelligence). The company excels in more than 180 languages and has over 1 million experienced contractors.

Recent Updates

On 9 December 2019, the company issued 123,903 fully paid ordinary shares under Section 708A(5)(e) to the existing institutional and sophisticated investor, pursuant to the Leapforce and Raterlabs acquisition.

Financial Highpoints for H1FY19

The company recently updated the market with its financial performance for the half-year ended 30th June 2019:

The company’s revenues increased 60% year over year and came in at $245.1 million. Relevance revenue during the period increased 48% and came in at $193.7 million. Underlying EBITDA was up 81% and increased to $46.3 million. Underlying EBITDA margins came in at 18.9% as compared to 16.8% reported in the year-ago period. The company distributed a dividend of $0.04 per share for the period (partially franked).

Outlook

On 18 November 2019, the company provided an update to its FY19 outlook. Appen now anticipates its FY19 underlying EBITDA to be in the range of $96M to $99M, up from the previous guidance of $85 million – $90 million. The projection is based on $1 to be approximately equal to $0.74 for the period of Nov-Dec 2019. The company reiterates its ARR outlook in the range of $30M - $35M.

Stock Performance

Appen has a market cap of $2.68 billion, with ~ 121.11 million outstanding shares. Appen stock closed at $21.850 on 12 December 2019, down by 1.443% relative to the previous close.

Altium Limited

Altium Limited (ASX: ALU) is one of the initial providers of PCB design tools and components, along with data management software. The company’s flagship product is best recognised for brilliance in 3D Printed Circuit Board (PCB) Computer. The company has also aided many organizations in creating next-generation electronic products and systems.

Power in the PCB Market (Source: Company Report)

Sneak-Peak in Financial Results for FY19

On 19 August 2019, the company provided the financial results for the period ended 30 June 2019, and some of the highlights are as mentioned below:

  • The company reported revenue of US$171.8 million, up 23% year over year.
  • Net Profit After Tax (NPAT) for the year stood at US$52.9 million as compared to US$37.5 million reported in FY18.
  • Earnings per share came in at 40.57 US cents, up 41% year over year.
  • Cash in hand at the end of the year came in at US$80.5 million.
  • The total number of subscribers for the period came in at 43,698, up 13% year over year.
  • The company paid a dividend of AU34 cents, which increased 26% from the prior-year period.

Outlook

For FY20, the company expects revenues to be US$ 205 million – US$ 215 million and predicts EBITDA margin to be in the range of 37% to 38%. In the long run, Altium predicts to achieve subscriber of 100,000 by 2025.

Stock Performance

Altium has a market cap of $4.54 billion, with ~ 130.97 million outstanding shares. Altium stock closed at $34.310, down by 1.038% relative to the previous close.

Afterpay Touch Group Limited

Afterpay Touch Group is a technology-driven payments company throughout Australia, United States, United Kingdom and New Zealand. It serves consumer-facing companies in the healthcare, telecommunications, and convenience retail sectors in Australia.

FY19 Highlights (ended on 30 June 2019)

The company has recently provided the financial results for the fiscal year ended 30 June 2019, and some of the highlights are as mentioned below:

The company reported revenue of $17.1 billion, down 18% year over year. Underlying sales grew 140%, aided by 99% rise sales in Australia and New Zealand. Active merchants during the period soared 101% year over year to 32,300. Adjusted EBITDA came in at $35.5 million in FY19. Operating cash flow for the period was $71.4, up from $42.5 million reported in the prior period. Free cash flow came in at $33.3 million, up from 22.9 million in the year-ago period. Net cash at the end of the year stood at $181.3 million.

Outlook

Afterpay expects growth across all geographies, solid balance sheet and strong revenue base. The total addressable market for Instore in Australia and New Zealand will be at least 5-8x times that of online retail sales in FY20. Moreover, Afterpay will continue to improve customer satisfaction, by offering more exclusive data insights by FY20.

Stock Performance

Afterpay has a market cap of $7.65 billion, with ~ 259.75 million outstanding shares. The company stock price closed at $28.870 on 12 December 2019, down by 2.036% relative to the previous close.

Xero Limited

The company offers an online business platform to small and medium businesses. Xero integrates with more than 400 add-on applications letting customers to modify Xero to their demands. The company has a total subscriber base of more than 1.8 million worldwide.

1H FY20 Financial Highlights

The company has recently provided the financial results for half-year ended 30th September 2019 and some of the highlights are as mentioned below:

Operating revenue for the period went up by 32% and came in at NZ$338.7 million. Total subscribers came in at 2.057 million. Annualised monthly recurring revenue (AMRR) came in at $764.1 million, up 30% year over year. Free cash flow came in at $4.8 million. Company’s gross margin came in at 85.2%, which increased 240 basis points. NPAT stood at $1.3 million. EBITDA during the period almost doubled year over year and came in at $65.9 million (excluding impairments).

Stock Performance

Xero has a market cap of $11.33 billion with ~ 141.46 million outstanding shares. The Xero stock price closed at $78.880 on 12 December 2019, down by 1.535% relative to the previous close.


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