Stock (Symbol) |
Ultimate Software (ULTI) |
Stock Price |
$198 |
Sector |
| Technology |
Data is as of |
| May 26, 2016 |
Expected to Report |
| Jul 26 – Aug 1 |
Company Description |
 ULTI is a cloud provider of people management solutions, referred to as human capital management (HCM). UltiPro product suite (UltiPro) is engaging solution that has human resources (HR), payroll, and benefits management and includes global people management, available in approximately 10 languages with over 35 country-specific localizations. Its solution includes feature sets for talent acquisition and onboarding, HR management and compliance, benefits management and online enrollment, payroll, performance management, compensation management with salary planning, budgeting, and development of incentive plans, succession management, reporting and analytical decision-making and predictive tools, and time and attendance. Its customers represent a variety of industries, including manufacturing, food services, sports, technology, finance, insurance, retail, real estate, transportation, communications, healthcare. Source: Thomson Financial |
Sharek’s Take |
 Ultimate Software (ULTI) is one of my favorite stocks. The company develops and operates cloud-based human resource software. Ultimate Software was founded in 1990 by the current CEO Scott Scherr, it went public in 1998, and went to a cloud-based platform in 2002. Its UltiPro processes payroll, benefits, and time clock abilities. Optional add-ons include recruiting and new employee tools, as well as its Talent Management suite which is composed of Performance Management, Talent Predictors and Succession Management. Revenue since 2002 has grown at a CAGR of 20% — with record sales each year. The company has a beautiful headquarters just west of Ft. Lauderdale Florida and gets high marks for employee satisfaction. ULTI continues to impress investors by beating earnings estimates. Last qtr the company clocked in with 40% profit growth, beating analysts estimates of 27%. That’s impressive profit growth. There’s high levels of certainty and consistency with this stock, as recurring revenue accounts for 80% of sales and the company has a 95% customer retention rate. But quality has its price, ULTI’s P/E is currently 60. Still, even at this price, the stock has good upside to my 2016 and 2017 Fair Values of $231 and $284. Ultimate Software is the future of human resource management. |
One Year Chart |
 Profits jumped an impressive 40% last qtr as sales increased 29%. The company has beaten the street handily the past 4 qtrs, and if it continues on that trend will have 34% and 33% profit growth the next 2 qtrs. But for now profit estimates call for 23%, 23%, 16% and 21% growth the net 4 qtrs. I personally feel the Est. LTG of 23% is too low, this company is growing much faster than that. |
Fair Value |
 My Fair Value on ULTI is 70x earnings. When you look at the one-year chart of the stock it looks like ULTI is forming a cup-and-handle. The stock could break out any time and perhaps run to the $231 Fair Value I have for it. Oh, I wish to point out if it wasn’t for a one-time profit the company made in 2007 ULTI would have had profits up every year during the last decade. |
Bottom Line |
 Ultimate Software is the ultimate software for human resources, and is one of my favorite stocks. There’s vast potential for state of the art HR software, and this company could be the best in harnessing the opportunity. ULTI ranks 9th in the Growth Portfolio Power Rankings and 8th in the Aggressive Growth Portfolio Power Rankings. |
Power Rankings |
Growth Stock Portfolio
9 of 39Aggressive Growth Portfolio 8 of 17Conservative Stock Portfolio N/A |
