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Will the WiseTech Result be Enough for the High-Flying Tech Stock?

Jordan Baird

Jordan Baird is the head ASR Wealth Advisers client services desk and has been with the organisation since 2017. He first started investing in his early years. While he believes that investors should leave no stone unturned he has a particular interest in trading based on broad macroeconomic trends along with specific analysis of innovative up-and-coming companies.

WiseTech (ASX: WTC) was up 4.6% shortly after the market open today, as investors digested annual results which revealed healthy growth across the business. The company recorded revenue of $348.3m in FY19 (up 57%) with net profits of $54.1m, growing 33% from FY18. Revenue growth was primarily driven by organic growth across the business but is supported by a successful acquisition strategy over the long term.

wisetech

WiseTech CEO Richard White in an interview (Credit: Commsec)

WiseTech is a SAAS business operating across the logistics space. The signature solution it provides to the market is CargoWise platform, which helps firms increase productivity. These productivity gains are realised through a comprehensive suite of logistics management solutions embedded in the platform, that enable automation and more efficient supply chain management. Data can be entered once and is accessible across a client’s global database, increasing accountability and reducing errors. This increases viability and simplifies the supply chain, thus making it far easier to manage. Capitalising on enterprise customers gives them a market with high buying power, which WiseTech later could potentially translate into higher revenue per user.

This puts the company on a PEG ratio of 4.93, making it look one of the most expensive WAAAX companies on the index. A PEG ratio is the ratio of a PE multiple to earnings growth, with a number of one typically being used to demarcate expensive growth companies from cheap ones. A PEG of 4.93 implies that investors are expecting WiseTech to continue slowly dominating the market it is in around the world and establish a huge competitive moat. The company’s strong management team may well make this a reality, but either way it is important for investors to be aware of what the market is pricing in.


 

Disclaimer:

This article has been prepared by the Australian Stock Report Pty Ltd (AFSL: 301 682. ABN: 94 106 863 978)

(“ASR”). ASR is part of Amalgamated Australian Investment Group Limited (AAIG) (ABN: 81 140 208 288 Level 13, 130 Pitt Street, Sydney NSW 2000).

This article is provided for informational purpose only and does not purport to contain all matters relevant to any particular investment or financial instrument. Any market commentary in this communication is not intended to constitute “research” as defined by applicable regulations. Whilst information published on or accessed via this website is believed to be reliable, as far as permitted by law we make no representations as to its ongoing availability, accuracy or completeness. Any quotes or prices used herein are current at the time of preparation. This document and its contents are proprietary information and products of our firm and may not be reproduced or otherwise disseminated in whole or in part without our written consent unless required to by judicial or administrative proceeding. The ultimate decision to proceed with any transaction rests solely with you. We are not acting as your advisor in relation to any information contained herein. Any projections are estimates only and may not be realised in the future.

ASR has no position in any of the stocks mentioned.

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