Stock (Symbol) |
SS&C Technologies (SSNC) |
Stock Price |
$40 |
Sector |
| Technology |
Data is as of |
| January 2, 2018 |
Expected to Report |
| Feb 13 |
Company Description |
 SS&C Technologies Holdings is a holding company. The Company is a provider of software products and software-enabled services that allow financial services providers to automate complex business processes and manage their information processing requirements. SS&C’s products and software-enabled services allows its clients to automate and integrate front-office functions, such as trading and modeling, middle-office functions, such as portfolio management and reporting, and back-office functions, such as accounting, performance measurement, reconciliation, reporting, processing and clearing. Source: Thomson Financial |
Sharek’s Take |
 Alternative investments into crypto-currencies like BitCoin are hot right now. Crypto-currency prices are zooming higher, with investors taking notice. One way to play this craze without actually taking the chance on buying the coins is to get SS&C Technologies (SSNC) stock. SS&C is a financial software company that is the biggest alternative-fund administrator in the world. So these new hedge funds that are coming out to invest in cypto-currencies will likely use SS&C to provide fund administration, trading, record keeping, and performance measurement to money managers. SS&C is also the world’s biggest private-equity fund administrator, as well as the largest provider of financial software. The company grows primarily through acquisitions (and partially from raising software prices every year). SS&C has completed more than 40 companies acquired in the last 20 years. During the last two years it’s acquired Citi Alternative Investor Services (which tracks alternative investments), Salentica (a CRM which works with Salesforce) Wells Fargo Fund Services and Conifer Financial Services. SSNC has been growing around 20% a year, but the Est. LTG just dropped from 20% to 12% because (a) the company has bought so many fund administrators there’s not a lot of companies left to gobble up and (b) investors are trowing money at index funds and ETFs, which are doing well and charge investors lower management fees. And fees are a big deal right now as the S&P is doing well. So why pay a money manager 2-3%? That’s the thought anyway. But history shows index funds go on a roll sometimes, then the pendulum switched back to active managers outperforming. SSNC is growing in the high-teens and has a reasonable P/E of 18. That’s a good value for a growth stock. But this stock isn’t getting a lot of attention as internet stocks with vast growth opportunity are attracting investor attention. My Fair Value on this stock is $49 for 2018. Long-term I imagine a company like Salesforce could acquire the company at a higher level. |
One Year Chart |
 Around 19% profit growth the last 4 qtrs, but last qtr SS&C missed revenue estimates. Sales grew just 7%. The company passes along price increases to its customers each year, which I think is the main organic driver for growth, but needs to continue acquisitions to keep the high-teens growth going. SSNC met profit estimates for the 3rd straight qtr and annual estimates have stayed steady for a year now. Qtrly Estimates are for 15%, 20%, 17% and 12% profit growth the next 4 qtrs. Analysts expect 15% profit growth in 2018. These numbers are good but not great. The big news this qtr is the Est. LTG has fallen “out of bed” from 20% to 12%. My concern with this company is that growth could slow. But wit h a P/E of jsut 18 the stock is very reasonable. |
Fair Value |
 My Fair Value on SS&C is 22x earnings, or $49 for 2018 and $54 for 2019. There’s good upside here, but investors have to deal with the fact this stock isn’t moving. There’s a lot of software companies growing much faster than this. |
Bottom Line |
 As investments become more complex, SS&C’s software is what many money managers use to handle a fund’s recordkeeping tasks. And with Bitcoin all the rage right now, SS&C has the ability to expand. But 7% sales growth isn’t getting investors to climb aboard as there’s faster growth elsewhere. SSNC ranks 36th of 38 stocks in the Growth Portfolio Power Rankings. I’m getting a little bored with this stock. |
Power Rankings |
Growth Stock Portfolio
36 of 38Aggressive Growth Portfolio N/AConservative Stock Portfolio N/A |
