ULTI

The Ultimate Software Group Inc

TMT


Presented:11/07/2018
Price:$256.94
Cap:$8.02B
Current Price:$331.36
Cap:$10.50B

Presented

Date11/07/2018
Price$256.94
Market Cap$8.02B
Ent Value$10.11B
P/E Ratio162.62x
Book Value$25.85
Div Yield0%
Shares O/S31.20M
Ave Daily Vol297,857
Short Int4.59%

Current

Price$331.36
Market Cap$10.50B
The Ultimate Software Group, Inc. engages in the development and provision of cloud-based human capital management solutions. Its products include solutions for talent acquisition and on boarding, human resources management and compliance, benefits management and online enrollment, payroll, performance management, salary planning and budgeting for compensation management, succession management, reporting and analytical decision-making tools, and time and attendance. It also offers role-based features for human resources professionals, executives, managers, administrators, and employees whether they are in or out of the office. The company was founded by Scott S. Scherr in April 1996 and is headquartered in Weston, FL.

Publicly traded companies mentioned herein: Paycom Software Inc (PAYC), The Ultimate Software Group Inc (ULTI), Workday Inc (WDAY)

Highlights

The presenter characterized his short position in The Ultimate Software Group (ULTI) as “relative value short.” The stock has been under pressure since peaking at over $330/share in mid-Sept [2018], but at current levels (~$250) the market is still ascribing ULTI a 40.4x forward multiple on consensus EPS for next year (~$6.20). If the company were growing more rapidly, or at least expanding margins, the presenter might understand; however, paying ~6x sales and 40x EPS for a 20% revenue growth story with no margin expansion makes little sense. At 30x earnings, there would be downside risk to $186 (-25%), and that assumes management can meet expectations.

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Idea Discussion

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