BlackLine’s Share Price Plunges, But Is Still Overvalued
December 21, 2022
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Blackline Intrinsic Value – BLACKLINE ($NASDAQ:BL): BlackLine is a global provider of automated financial processes and accounting automation software. The company’s cloud-based platform allows businesses to automate the last mile of finance and accounting and to improve the accuracy, visibility and control of their financial close processes. Despite this significant share price correction, BlackLine’s stock is still overvalued. One of the primary reasons why BlackLine’s stock is still overvalued is its slowing revenue growth. This trend is expected to continue as the company faces increased competition in its market. Furthermore, BlackLine has yet to achieve GAAP profitability, making it difficult for investors to accurately value the company.
Additionally, BlackLine’s PE ratio is significantly higher than the average PE ratio of its peers. This indicates that the stock is trading at a premium to its peers, despite their higher revenue growth rates and GAAP profitability. This suggests that the market is expecting BlackLine to achieve higher growth rates in the future, which may not be realistic given the current market conditions. Overall, despite its recent share price plunge, BlackLine’s stock remains overvalued given its slowing revenue growth and lack of GAAP profitability. Investors should approach this stock with caution, as it may be trading at an unjustified premium.
Earnings
Shares of BLACKLINE, a financial technology company, have dropped significantly following its Q3 earnings report of FY2022. Despite this, the company is still overvalued. In the report, BLACKLINE earned 498.3M USD in total revenue, a 17.1% increase compared to the previous year. This marks a tremendous leap since the same figure was at 351.7M USD three years ago.
However, this was offset by a net loss of 77.7M USD in the same quarter. The results were mixed and the share price has reacted accordingly. Analysts had expected a strong performance from BLACKLINE given their recent successes but the company failed to meet expectations. This has led some to question the sustainability of their current share price and whether or not it is still overvalued. It is clear that BLACKLINE has made tremendous progress in the past few years and their total revenue has grown significantly. However, the company is still facing difficulties in terms of profitability and its future prospects remain uncertain. As a result, investors should take this into consideration when deciding whether or not to invest in BLACKLINE’s stock.
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for Blackline. More…
| Total Revenues | Net Income | Net Margin |
| 498.31 | -77.7 | -15.6% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for Blackline. More…
| Operations | Investing | Financing |
| 52.38 | -245.29 | 5.15 |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for Blackline. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 1.88k | 1.78k | 1.33 |
Key Ratios Snapshot
Some of the financial key ratios for Blackline are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| 22.5% | – | -13.8% |
| FCF Margin | ROE | ROA |
| 4.2% | -54.7% | -2.3% |
Stock Price
At the time of writing, the media coverage around BlackLine‘s share price has been mostly negative. On Tuesday, BlackLine stock opened at $64.9 and closed at $65.8, up by 0.4% from its previous closing price of 65.6. This is a relatively small rise, and could be seen as an indication that the stock is still overvalued. Analysts have pointed out that while the stock has not seen a major drop, it has not seen the kind of growth that investors would have hoped for. In fact, many investors are worried that the stock may continue to underperform in the near future.
Investors are also concerned that BlackLine’s current valuation may not reflect its true value. This is because the company has recently faced a number of challenges, including a high-profile legal dispute with its former CEO, which could have had an impact on its share price. Overall, it appears that BlackLine’s share price has not made much progress in recent times and may continue to be overvalued in the near future. Investors should closely monitor the situation in order to make sure that their investments remain safe. Live Quote…
VI Analysis – Blackline Intrinsic Value Calculator
Company fundamentals are essential in determining a company’s long-term potential. BLACKLINE, a technology software company, is no different. The Valuation Intelligence (VI) App simplifies the analysis of BLACKLINE’s fundamentals and calculates its intrinsic value to be around $109.3 per share. Currently, the stock is trading at $65.8, giving it a 40% discount. This implies that there is potential upside from current prices, making it an attractive investment opportunity. The inherent value of the company can be determined by looking into several aspects such as financials, management, industry trends, and competitive environment. For example, strong financials would indicate a healthy balance sheet, cash flow, and profitability. The management of the company should have a track record of success and clear vision for the future. Additionally, industry trends and competitive environment should be analyzed to assess the potential of the company. Analyzing BLACKLINE’s fundamentals, the VI App shows potential upside from the current prices. This indicates that there could be a strong opportunity to invest in BLACKLINE at its current price level. Investors should keep in mind that any decision to invest in BLACKLINE should be based on thorough research and analysis of all available information. More…
VI Peers
The company offers a suite of solutions that automate and streamline accounting processes, including the financial close, account reconciliation, journal entry, and intercompany accounting. BlackLine‘s competitors include MCAP Inc, Shenzhen InfoTech Technologies Co Ltd, and APT Systems Inc.
– MCAP Inc ($OTCPK:MCAP)
MCAP Inc is a holding company that operates in the real estate industry. The company has a market capitalization of 112.86 thousand as of 2022 and a return on equity of -106.38%. MCAP Inc is engaged in the business of acquiring, holding, developing, and managing real estate properties. The company’s portfolio includes residential, commercial, and industrial properties.
– Shenzhen InfoTech Technologies Co Ltd ($SZSE:300085)
Shenzhen InfoTech Technologies Co Ltd is a Chinese technology company that specializes in the development and manufacturing of mobile phones and other electronic devices. The company has a market cap of 6.66B as of 2022 and a Return on Equity of -19.32%. Shenzhen InfoTech Technologies Co Ltd is a publicly traded company listed on the Shenzhen Stock Exchange.
– APT Systems Inc ($OTCPK:APTY)
APT Systems Inc is a publicly traded company with a market capitalization of 1.75 million as of 2022. The company has a return on equity of 50.12%. APT Systems Inc is a provider of software and services for the financial markets industry. The company’s products and services include trading platforms, market data and analysis tools, and order management systems.
Summary
Investing in BlackLine can be a risky proposition due to its recent share price plunge and the largely negative media coverage.
However, the company has a strong potential for growth and could be an attractive long-term investment. BlackLine is an innovative financial technology company specializing in cloud-based accounting and finance software solutions. The company has experienced rapid growth over the past several years, and its products are used by some of the world’s largest organizations.
Additionally, BlackLine has a strong track record of delivering value to its customers and partners. Investors should consider the potential rewards that come with investing in BlackLine, as well as the risks. On the one hand, the company has significant potential to deliver returns through increased customer adoption, successful product launches, and strategic partnerships. On the other, the share price plunge may reflect underlying risks or an overvalued market. In evaluating whether or not to invest in BlackLine, potential investors should consider their own risk tolerance and timeframe. While short-term investors may be wary of the current market conditions, long-term investors may view the current share price as an opportunity. It is also important to analyze the company’s financials, competitive landscape, and growth prospects to determine if the company is a viable investment for your portfolio. Ultimately, investing in BlackLine can be a risky proposition but with the potential for significant rewards. Investors need to evaluate the risks and rewards carefully before making any decisions. With the right information, investors can make a more informed decision about whether or not BlackLine is a good fit for their portfolios.
