Over the next 6 years, Insight Enterprises shares will need to reach $308 to achieve average annual stock market performance of 9.0%. Insight Enterprises’ stock price will need to reach $363 by 2029 to achieve upper quartile performance. At the current price of $184, what are market expectations regarding Insight Enterprises’ future operating performance?
Executive Summary
- Insight Enterprises’ important characteristics: high profitability, stability, above average financial strength, and below average expected growth.
- Very high valuation, leading shareholder returns. Current valuation levels are very high relative to the Insight Enterprises Peer Group. Recent market returns have significantly outperformed the Insight Enterprises Peer Group. Total shareholder returns expected to significantly lag the overall equity market. Based on current investor expectations, Insight Enterprises shares should reach a level of $217 by 2029 — an 2.8% per year total shareholder return. A 2029 stock price of $308 would reflect median performance and a price of $363 would be required to reach upper quartile performance.
- Insight Enterprises’ historical growth is average. Historical growth has been average relative to the Insight Enterprises Peer Group and forecasted growth is relatively below average. Revenue Growth has lagged. This factor has negatively affected market perceptions of Insight Enterprises. Insight Enterprises’ historical income statement growth and balance sheet growth have diverged. Revenue growth has fallen short of asset growth; earnings growth has exceeded equity growth resulting in an improving return on equity. Insight Enterprises’ consensus growth expectations are in line with past growth.
- Asset Turnover is group lagging. This factor has negatively affected market perceptions of Insight Enterprises. The company has very high excess cash and will have to work to reinvest at attractive returns to support profitability and valuation.
- Insight Enterprises’ risk profile is neutral. Overall variability has been relatively low with relatively low revenue variability, very low E.P.S. variability, and above average stock price volatility. Financial Strength is only average and earnings’ expectations are below average. The debt/capital ratio has risen.
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