Stock (Symbol) |
SS&C Technologies (SSNC) |
Stock Price |
$36 |
Sector |
| Technology |
Data is as of |
| March 30, 2017 |
Expected to Report |
| May 3 – 8 |
Company Description |
 SS&C Technologies Holdings, Inc. (SS&C 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. The Company’s portfolio of software 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 |
 SS&C Technologies (SSNC), which provides financial services software for institutional investment managers, has a good environment to work in as the stock market has been rising. SS&C provides fund administration, trading, record keeping, and performance measurement to money managers, and if the managers are doing well its easier for SS&C to raise prices and get additional sales from add-on products. Acquisitions are a big part of SS&C’s growth, with more than 40 companies acquired in the last 20 years. Last year it acquired Citi Alternative Investor Services (which tracks alternative investments), Salentica (a CRM which works with Salesforce) Wells Fargo Fund Services and Conifer FInancial Services. The Citi acquisition is important as alternative assets under management have been growing in the teens industry wide and this deal made SS&C the 2nd largest hedge fund administrator. Recently, hedge funds have been losing clients as managers had a tough time beating the market. Passive investing (like investing in index funds) accounts for nearly 40% of total US equity assets under management, more than twice the level in 2005 (source: Goldman Sachs). Passive investing has been beating active investing (money managers) for years, but this trend tends to oscillate over time, and with the S&P 500’s P/E high, I think market gains will be harder to come by and this is now a stock pickers market. Thus, the hedge fund business should be better, and that’s good news for SS&C. SSNC has grown profits better than 20% per year since it went public, has an Est. LTG of 20% per year, and has a reasonable P/E of 18. This is a good growth stock to own, especially in this environment. |
One Year Chart |
 Sales grew 33% last qtr (with the help of acquisitions) and profit growth was 28%, which beat the 22% estimate. After SSNC reported, 2017 profit estimates increased from $1.84 to $1.93. Qtrly profit Estimates for the next 4 qtrs stayed consistent with last qtr and are 19%, 21% and 19% and 13%. The stock has a nice Est. LTG of 20% per year as well as a low P/E of 18. SSNC broke out at $35 when it reported earnings, and has stayed above that mark — a good sign. |
Fair Value |
 Last qtr I reduced my Fair Value from 22x earnings to 20x. The stock has since risen, but I’m going to keep my Fair Value P/E at 20 just to be reasonable. It seems like this stock has a tough time keeping a P/E over 20. Still, my upsides for this year and next year are 8% and 22% — not bad. |
Bottom Line |
 SS&C Technologies is a worldwide leader in financial services software that money managers depend on to do their daily business. I use its Advent software, and the company raises its fee a little each year. But like many money managers, my performance hasn’t beaten the S&P 500 the past three years. But that hasn’t been the case in 2017 as my returns are very good. With the S&P 500’s P/E high, I firmly believe we are in a stock pickers market as active investing should beat passive investing. Money managers should thrive going forward, which is good news for SS&C. SSNC ranks 25th of 30 stocks in the Growth Portfolio Power Rankings. |
Power Rankings |
Growth Stock Portfolio
25 of 30Aggressive Growth Portfolio N/AConservative Stock Portfolio N/A |
