One-glance verdict
Undervalued
$44.51 our estimate vs market $3.15
Wall Street consensus: $5.60 (-87.4% lower than our fair-value estimate)
93% below our estimate, below the bear case
Fundamentals snapshot
Endava plc
DAVA · NYQ · Technology · Software - Infrastructure
Current price
$3.15
52-week range
$2.55 - $15.89
Market cap
$166.45M
Balance sheet
Stretched
2.95x Stretched
Net debt $253.44M. Interest coverage shows how many times profit covers the interest bill.
What stands out
2 Rewards
3 Risks
2 rewards · 3 risks
- Reward Revenue grew 4.3% last year.
- Reward Free cash flow was positive in 4/10 years.
- Risk Return on equity was -99.8% last year — the company lost money on shareholders' equity.
- Risk Operating margin compressed from 14.6% to -3.4% over 3 years.
What this company does
Endava plc
Endava is a technology company that helps other businesses design, build, and run their digital systems, like mobile apps and payment platforms. It makes money by selling its tech expertise to companies across many different sectors, from banking to healthcare, which means its success isn't tied to just one type of industry.
How the company got here
Endava was founded in 2000 and became the company it is today through the 2006 merger of a London-based consulting firm and a software services company in Eastern Europe. This combination allowed them to offer IT consulting and software development services from locations that were close to their Western European clients. The company has grown by acquiring other technology firms, which expanded its presence in Latin America and the United States. In 2018, Endava had its initial public offering (IPO), which is when a private company first sells shares of stock to the public, and began trading on the New York Stock Exchange.
What it actually does
Endava helps other businesses design, build, and operate their software and technology. Think of them as a technology partner that companies hire for specialized projects like creating a new mobile app, moving their systems to the cloud (a network of remote servers that store and manage data), or modernizing their payment systems. They work with companies across many sectors, including finance, healthcare, retail, and media. Endava makes money by charging clients for their services, often based on the time their teams spend on a project or through longer-term contracts to manage a company's software.
Digital Transformation and Engineering Services
This is Endava's core business, where they provide a wide range of technology services to help companies with their digital transformation (the process of adopting digital technology to change how a business operates). Their services include consulting on technology strategy, designing user-friendly digital products, and developing custom software. They also offer services in data and artificial intelligence (AI), cloud application engineering, and software testing. This single segment serves all of Endava's clients across various industries, with a significant portion of their revenue coming from the payments and financial services sectors.
What management is betting on now
Endava's management is heavily focused on artificial intelligence (AI) and sees it as a major driver of future growth. They are investing in training their employees and developing new services, like their Dava.Flow platform, to help clients implement AI technologies. The company is also concentrating on securing larger, multi-year contracts with major companies to create more stable and predictable revenue. Additionally, Endava continues to pursue strategic acquisitions to enter new markets and expand its expertise in high-growth areas.
Price history
How the share price has moved
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Is it cheap or expensive?
Fair value $44.51 vs current price $3.15
Wall Street consensus is the average analyst price target: $5.60 (-87.4% lower than our fair-value estimate).
Our most-likely fair value is $44.51 a share — about 1,313.0% above today's price of $3.15, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Stretched
Net debt $253.4M. Interest coverage 2.9x.
Net debt
$253.44M
Interest coverage
2.95x
Endava plc's profit covers its interest bill about 2.9 times over. and 1 peers sit below 1x, which is the danger zone where profit does not fully cover the interest bill.
Stretched
Worse cushion
Baseline
Better cushion
DAVA
BASELINE
Endava plc
Total debt $317.89M Interest coverage 2.95x This is the baseline the peer rows are being compared against.
Total debt $462.67M Interest coverage 6.18x +110% vs DAVA Carries about 2.1x more debt cushion than DAVA.
Total debt $287.94M Interest coverage 301.10x +10,124% vs DAVA Carries about 102.2x more debt cushion than DAVA.
Total debt $128.28M Interest coverage 4.59x +56% vs DAVA Carries about 1.6x more debt cushion than DAVA.
Total debt $17.42M Interest coverage -0.09x -100% vs DAVA This peer has almost no interest-payment cushion compared with DAVA.
What you should know
The case for and against DAVA
2 Rewards
3 Risks
Rewards
-
Revenue grew 4.3% last year.
-
Free cash flow was positive in 4/10 years.
Risks
-
Return on equity was -99.8% last year — the company lost money on shareholders' equity.
-
Operating margin compressed from 14.6% to -3.4% over 3 years.
-
Insider ownership is only 1.0% (peer median: 3.0%).
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
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Forward P/E
3.70x
P/B
0.72x
P/S
0.23x
EV/EBITDA
11.82x
PEG ratio
0.28x
Profitability
How much profit each dollar creates
Gross margin
21.9%
Operating margin
-3.4%
Net margin
-56.1%
ROE
-99.8%
ROA
0.3%
Health
Liquidity and balance-sheet strength
Debt / equity
1.38x
Current ratio
2.06x
Quick ratio
2.06x
Total debt
$317.89M
Total cash
$64.45M
Growth
How the business has been compounding
Revenue TTM
$969.36M
Revenue 5Y CAGR
5.7%
EPS TTM
-10.23
EPS 5Y CAGR
-36.9%
Cash flow
How much cash the business throws off
Operating CF TTM
$70.31M
Free CF TTM
$64.04M
FCF margin
6.6%
Dividend
Shareholder payout
Yield
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Payout ratio
0.0%
Last ex-div date
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