As reflected at the current price of $348, what future ANSYS operating performance is the market anticipating? To achieve average annual stock market performance of 9.0% over the next 6 years, ANSYS shares will need to reach $584. Upper quartile performance will require a $687 ANSYS stock price by 2029.
Executive Summary
- Key ANSYS characteristics: high financial strength, stability, above average expected growth, and average profitability. A big positive influence on ANSYS’ valuation is its superior Risk Profile.
- High valuation, average shareholder returns. Current valuation levels are high relative to the ANSYS Peer Group. Recent market returns have tracked the ANSYS Peer Group. Total shareholder returns expected to significantly lag the overall equity market. Based on current investor expectations, ANSYS shares should reach a level of $308 by 2029 — an -2.0% per year total shareholder return. A 2029 stock price of $584 would reflect median performance and a price of $687 would be required to reach upper quartile performance.
- Historical growth has been high relative to the ANSYS Peer Group and forecasted growth is relatively average. ANSYS’ historical income statement growth and balance sheet growth have diverged. Revenue growth has paralleled asset growth; earnings growth has exceeded equity growth resulting in an improving return on equity. ANSYS’ consensus growth expectations are in line with past growth.
- Profitability is only average. The company has normal cash needs.
- Risk Profile has been ANSYS’ biggest valuation strength. ANSYS’ risk profile is very favorable. 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 relatively very high and earnings’ expectations are relatively very high. The debt/capital ratio has been relatively steady.
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