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IRESS Ltd IRE

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Stock XASX Rating as of
A$8.63 +0.04 (0.47%)
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As of Delayed Price Closed
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Company Report

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Iress: Continued Signs of Earnings Revival

Shaun Ler

Narrow-moat Iress remains on track for near-term margin expansion. It is supported by a capital market recovery from turbulent levels in 2023, a renewed focus on its core Australian trading, wealth, and superannuation businesses, and cost reductions. We expect improving product up/cross-sell to support client retention and incremental new client wins. Cost reductions are mainly in noncore areas and are not likely to hinder revenue generation.

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Price vs Fair Value

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IRE is trading at a 212% premium.
Price
A$8.63
Fair Value
A$2.90
Uncertainty
High
1-Star Price
A$49.42
5-Star Price
A$1.61
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Iress’ economic moat, leading market share, and renewed focus on its higher-returning assets should protect margins and enable a high-single-digit EPS CAGR over the medium-term.

Bears

Iress’ trading and market data business faces the threats of active managers ceding share to passive investments, and stockbrokers transitioning toward wealth management business models.

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Trading Information

Previous Close Price
A$8.59
Day Range
A$8.53–8.64
52-Week Range
A$4.92–10.98
Bid/Ask
A$8.49 / A$8.64
Market Cap
A$1.61 Bil
Volume/Avg
197,498 / 661,348

Key Statistics

Price/Earnings (Normalized)
—
Price/Sales
2.47
Dividend Yield (Trailing)
—
Dividend Yield (Forward)
—
Total Yield
—

Company Profile

Iress develops software for the financial-services industry, operating in multiple regions and servicing clients ranging from small retail to large institutional businesses. Its core business unit, mainly in Australia, generates most of the company's earnings and free cash flows. Iress expanded into noncore markets through acquisitions, ultimately eroding returns and margins, with free cash flows from the core business invested in the noncore businesses. Its recent strategy includes reprioritizing growth in the core APAC business and divesting/monetizing noncore businesses. We view this renewed focus on its core business as a positive, as it will help maintain Iress' economic moat.
Sector
Technology
Industry
Software - Application
Stock Style Box
Small Core
Total Number of Employees
1,422
Website
https://www.iress.com

Competitors

Valuation

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Metric
IRE
ENV
MSCI
Price/Earnings (Normalized)
 —34.3134.69
Price/Book Value
 5.906.28—
Price/Sales
 2.472.8514.68
Price/Cash Flow
 24.2817.6330.35
Price/Earnings
IRE
ENV
MSCI

Financial Strength

Metric
IRE
ENV
MSCI
Quick Ratio
 0.850.810.92
Current Ratio
 1.281.191.00
Interest Coverage
 −4.44−11.718.26
Quick Ratio
IRE
ENV
MSCI

Profitability

Metric
IRE
ENV
MSCI
Return on Assets (Normalized)
 −0.67%7.56%21.55%
Return on Equity (Normalized)
 −1.86%22.37%—
Return on Invested Capital (Normalized)
 1.18%9.74%33.21%
Return on Assets
IRE
ENV
MSCI
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