Software eats the world and virtually no things are left through the world. Companies that bring it to life are rewarded with explosive profit growth and high appreciation multiples, but the latter has weighed the return because the industry has been flat in the past six months. A consolation is that the S&P 500 has not been given up either.
Investors must be careful because only some companies are worth their ratings, because AI and competition will commode many products. If you keep that in mind, here are three software stocks that we wipe over.
Market capitalization: $ 351.4 million
Founded by Josh James after the sale of his former business Omniture to Adobe, Domo (Nasdaq: Domo) offers business intelligence software with which managers in real-time critical statistics can open and visualize, using their smartphones.
Why do we think Domo is behind?
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The offer cannot generate interest in the past year, because invoicing falls on average 3.5%
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Long payback time on sales and marketing costs limit the growth of the customer and signal that the company is active in a very competitive environment
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Unfavorable liquidity position could lead to additional stock financing that shareholders diluted
Domo is traded at $ 9.00 per share, or 1.1x forward price-to-sales. View our free in -depth research report for more information about why Domo does not pass our bar.
Market capitalization: $ 2.11 billion
Started in 2001, Five9 (Nasdaq: FIVN) offers software-as-a-service, making it easier for companies to set up call centers and run efficiently to offer more tailor-made customer support.
Why are we wary for FIVN?
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18% annual revenue growth in the past three years was slower than its software colleagues
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The estimated sales growth of 8.4% for the next 12 months means that the question of his three -year trend will delay
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Heavenly High maintenance costs result in an inferior gross margin of 54.7% that must be compensated by more use
The stock price of Five9 of $ 28.23 implies a valuation ratio of 2.1x forward price-to-sales. Dive into our free research report to see why there are better opportunities than FIVN.
Market capitalization: $ 1.54 billion
Founded by Noah Glass, who wanted to get a cup of coffee faster on the way to work, OLO (NYSE: OLO) offers restaurants and food retailers software to manage food orders and delivery.
Why is OLO falling short?
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The gross margin of 54.7% is far among its competitors, so that less money remains to invest in areas such as Marketing and R&D
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Operational losses show that profitability sacrificed while the company is being scaled
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Low free cash flow margin of 7.4% for the past year gives little breathing space, which means that the ability to limit growth or to limit the recurring capital to shareholders
For $ 9.22 per share, OLO is traded at 4.7x forward price-to-sales. If you are considering OLO for your portfolio, see our free research report for more information.
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