Perhaps an interesting small cap from the software sector I found in $CVLT (-1,77%) found.
Commvault: Software quality with new earnings power
CommVault (NASDAQ:CVLT) comes from the software and data protection world. The company helps companies to back up and restore data and better control cyber risks. In a world where data loss and cyberattacks are becoming costly, this is an area with structural tailwinds.
The story here is not so much explosive sales growth as increasing profitability. The EBIT margin is 8.8%, the five-year average is 7.5%. ROIC stands at 12.1%. More importantly, analysts expect EBIT to grow by a whopping 49.0% per year over three years. EPS is also expected to rise sharply - from 1.97 to 4.29 dollars.
In terms of turnover, Commvault initially appears less spectacular than the other two names. Revenue has risen by an average of 8.2 % over the last five years and is expected to grow at a CAGR of around 14 % over the next three years. The decisive factor here, however, is the combination of software character, a high gross margin of 81.4% and strongly growing free cash flow. Levered free cash flow is 181.5 million dollars and the FCF yield is 5.3%.
The share was recently severely punished and is now trading at only around 39% of its 52-week high. This is precisely why the name is interesting: analysts see 79% potential up to 138.38 dollars, InvestingPro around 21% up to 94.52 dollars. This is the most speculative case in this screening, but also the one with the greatest re-rating potential if the margin expansion comes through as expected
