Endava PLC (DAVA, Financial), a prominent player in the software industry, has experienced a notable fluctuation in its stock price over recent periods. With a current market capitalization of $3.84 billion, the stock price stands at $66.41. Over the past week, Endava's shares have seen a slight decline of 2.04%. However, looking at a broader timeframe, the stock has gained an impressive 27.88% over the past three months. According to GuruFocus's valuation metrics, Endava is currently significantly undervalued, with a GF Value of $132.97, down from a past GF Value of $142.49. This valuation suggests a potential upside from the current trading price, maintaining its status as significantly undervalued from three months prior.
Introduction to Endava PLC
Endava PLC, founded in 2006, specializes in next-generation IT services, focusing on digital transformation and custom software development. The company has carved out a niche in the U.K. and European markets, serving clients across various sectors, including payments, financial services, technology, media, and telecom. Endava's approach to IT services has positioned it as a key facilitator for businesses looking to innovate and adapt to the digital era. 
Assessing Endava's Profitability
Endava's financial health is reflected in its strong Profitability Rank of 8/10. The company's operating margin stands at a robust 13.02%, outperforming 78.98% of its peers in the industry. Its return on equity (ROE) is 14.04%, higher than 75.5% of companies in the same space. Furthermore, Endava boasts a return on assets (ROA) of 10.30% and a return on invested capital (ROIC) of 18.19%, surpassing 84.24% and 83.69% of competitors, respectively. These figures not only demonstrate Endava's efficiency in generating profits from its assets but also its effectiveness in allocating capital. The company has maintained profitability for 8 out of the past 10 years, indicating consistent performance and financial stability.
Endava's Growth Trajectory
Endava's growth metrics are equally impressive, with a Growth Rank of 10/10. The company's 3-year revenue growth rate per share is an outstanding 30.20%, and its 5-year rate is 25.70%, both of which are higher than the majority of their industry counterparts. The 3-year EPS without NRI growth rate is a remarkable 90.00%, and the 5-year rate is 45.80%, showcasing Endava's ability to increase earnings at an exceptional pace. These growth rates highlight Endava's successful expansion and its potential for future profitability.
Key Shareholders in Endava
Endava's shareholder base includes notable investors who recognize the company's potential. Ron Baron (Trades, Portfolio) leads the pack with a 4.25% stake, holding 2,454,775 shares. Steven Cohen (Trades, Portfolio) follows with 327,900 shares, representing a 0.57% share, and Wasatch International Growth (Trades, Portfolio) holds 161,192 shares, accounting for 0.28% of the company. The confidence these prominent investors have in Endava underscores the company's strong fundamentals and growth prospects.
Competitive Landscape
When compared to its competitors, Endava stands strong with its market capitalization of $3.84 billion. Appian Corp (APPN, Financial) has a market cap of $2.78 billion, Rapid7 Inc (RPD, Financial) is valued at $3.42 billion, and Marqeta Inc (MQ, Financial) comes in at $3.27 billion. Endava's market position, alongside these close competitors, reflects its significant presence in the software industry and its competitive edge in terms of market valuation.
Conclusion
In summary, Endava PLC's recent stock performance, with a 27.88% gain over the past three months, is underpinned by its strong fundamentals. The company's valuation indicates that it is significantly undervalued, presenting a potential opportunity for investors. Endava's profitability metrics are robust, with high rankings in operating margin, ROE, ROA, and ROIC. Its growth prospects are exceptional, as evidenced by its top-tier growth rank and impressive revenue and EPS growth rates. The confidence of significant shareholders like Ron Baron (Trades, Portfolio) and Steven Cohen (Trades, Portfolio), along with a competitive market cap relative to its peers, further solidifies Endava's position as a compelling investment in the software industry.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
