ANSYS Stock Sees Limited Upside Potential Despite Premium Multiple
May 13, 2023
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ANSYS ($NASDAQ:ANSS) is a technology company that provides engineering simulation software to help organizations design innovative products. The company’s stock has been trading at a premium price, which has provided investors with limited potential for an increase in value. This is because the stock is already viewed as being overvalued and its current price is seen as unsustainable. The fundamental drivers of ANSYS stock are strong, with strong revenue growth and expanding profit margins.
However, the market has priced in this strength, and investors may find that there is not enough upside potential to justify the premium multiple at which ANSYS stock is currently trading. Given the fact that the stock is currently being traded at a significant premium and that the upside potential is limited, investors should be cautious when considering whether or not to purchase ANSYS stock. Although it is possible that the stock could still rise in value, the current price offers little incentive for investment in the company.
Share Price
Despite a small rise of 0.5% on Friday, ANSYS stock has seen limited upside potential. On Friday, the stock opened at $296.1 and closed at $297.5, up from the prior closing price of 296.0. Despite the slight increase, the stock has seen limited upside potential as it trades at a premium compared to its peers.
The company is also facing some headwinds in the near-term that could weigh on its stock price going forward. These factors suggest that any upside potential for ANSYS stock may be limited in the near-term. Live Quote…
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for Ansys. ANSYS_Stock_Sees_Limited_Upside_Potential_Despite_Premium_Multiple”>More…
| Total Revenues | Net Income | Net Margin |
| 2.15k | 553.34 | 25.7% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for Ansys. ANSYS_Stock_Sees_Limited_Upside_Potential_Despite_Premium_Multiple”>More…
| Operations | Investing | Financing |
| 680.83 | -529.79 | -281.69 |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for Ansys. ANSYS_Stock_Sees_Limited_Upside_Potential_Despite_Premium_Multiple”>More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 6.48k | 1.7k | 55.09 |
Key Ratios Snapshot
Some of the financial key ratios for Ansys are shown below. ANSYS_Stock_Sees_Limited_Upside_Potential_Despite_Premium_Multiple”>More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| 12.7% | 12.1% | 30.2% |
| FCF Margin | ROE | ROA |
| 30.4% | 8.4% | 6.3% |
Analysis
At GoodWhale, we recently conducted an analysis of ANSYS‘ wellbeing by using our Risk Rating system. According to the results, ANSYS is a high risk investment in terms of both financial and business aspects. We identified three risk warnings in the balance sheet, cashflow statement, and non-financial categories. To find out more about ANSYS’ results, please visit our website and register for a free account. With GoodWhale, you can get access to detailed information about both ANSYS and other investments, so you can make the best possible decision when it comes to investing. More…
Peers
Ansys Inc is a publicly traded company on the Nasdaq Global Select Market under the ticker ANSS. It is headquartered in Canonsburg, Pennsylvania, United States. The company develops and markets engineering simulation software used by engineers, designers, and architects to visualize how a product behaves under real-world conditions. Customers include corporations in the aerospace, automotive, consumer goods, electronics, energy, heavy industry, and biomedical industries.
Zwsoft Co Ltd (Guangzhou), Touchtech AB, System D Inc, are all companies that compete with Ansys Inc.
– Zwsoft Co Ltd (Guangzhou) ($SHSE:688083)
Zwsoft Co Ltd (Guangzhou) has a market cap of 16.94B as of 2022, a Return on Equity of 2.39%. The company is a software development company that focuses on providing design and drafting software solutions for the AEC industry. Its products include ZWCAD, ZW3D, and ZW CAD/CAM.
– Touchtech AB ($LTS:0GIM)
Touchtech AB’s market cap is 3.63M as of 2022. The company has a Return on Equity of -6.31%. Touchtech AB is a Swedish company that develops and sells touch screen technology. The company was founded in 2002 and is headquartered in Stockholm, Sweden.
– System D Inc ($TSE:3804)
System D Inc is a publicly traded company with a market capitalization of $9.15 billion as of 2022. The company’s return on equity is 16.51%. System D Inc is engaged in the business of providing information technology services. The company offers a range of services, including software development, application management, and infrastructure management.
Summary
Investing in ANSYS is not without its risks. The stock’s premium multiple leaves little room for upside, as current levels are already above analysts’ estimated fair value. Given the company’s size and mature industry, earnings growth may be limited in the near-term. Investors should analyze the firm’s financials, competitive position, and market dynamics to evaluate the potential for future returns.
Additionally, investors should consider any risks related to the current macroeconomic conditions, which will impact earnings and stock price performance. Ultimately, investors must determine if the potential rewards outweigh the risks of investing in ANSYS.
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