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RingCentral Inc Class A RNG

Morningstar Rating
$31.07 −0.07 (0.22%)
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Company Report

RingCentral Earnings: Better Profitability With Enterprise Strength and Ramping New Products

No-moat RingCentral reported fourth-quarter 2023 results that exceeded our profitability expectations and landed in line with our revenue assumption, while the outlook was slightly shy of our model. Vlad Shmunis made his return as CEO and emphasized his priorities for building a multiproduct business, expanding margins, and reducing stock-based compensation. The firm noted traction with new products, mainly RingCX, which it thinks can help drive $100 million in new annual recurring revenue by the end of 2025. The firm also detailed its improving balance sheet including continued repurchasing of convertible notes. Given results and guidance, our model changes are negligible, thus we maintain our fair value estimate of $51 per share. Shares remain undervalued in our view, but we prefer wide-moat stocks in our coverage.

Price vs Fair Value

RNG is trading within a range we consider fairly valued.
Price
$31.07
Fair Value
$13.00
Uncertainty
Very High
1-Star Price
$86.28
5-Star Price
$41.60
Economic Moat
Trxf
Capital Allocation
Pnkx

Bulls Say, Bears Say

Bulls

RingCentral has inked partnerships with a variety of legacy PBX and telecommunication service providers to deliver co-branded UCaaS solutions to approximately half of the 400 million on-premises phone seats.

Bears

We see significant competition from software giants like Microsoft, emerging threats like Zoom, well-positioned incumbents like Cisco, legacy providers like Avaya, and service providers like Verizon.

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News

Trading Information

Previous Close Price
$31.14
Day Range
$30.6531.80
52-Week Range
$25.0843.28
Bid/Ask
$29.90 / $32.00
Market Cap
$2.87 Bil
Volume/Avg
1.1 Mil / 1.5 Mil

Key Statistics

Price/Earnings (Normalized)
10.93
Price/Sales
1.44
Dividend Yield (Trailing)
Dividend Yield (Forward)
Total Yield
10.85%

Company Profile

RingCentral is a unified communications as a service, or UCaaS, provider. Its software helps users communicate and collaborate via voice, video, and messaging across all device types and all from one platform. RingCentral helps customers modernize and move from legacy on-premises systems to modern, cloud-based systems. Beyond its core RingCentral MVP solution, RingCentral also offers a cloud-based contact center solution, a stand-alone video meetings solution, and webinars.
Sector
Technology
Industry
Software - Application
Stock Style Box
Small Core
Total Number of Employees
4,084

Competitors

Valuation

Metric
RNG
FIVN
CSCO
Price/Earnings (Normalized)
10.9338.3512.17
Price/Book Value
11.234.42
Price/Sales
1.446.203.59
Price/Cash Flow
5.3324.1412.73
Price/Earnings
RNG
FIVN
CSCO

Financial Strength

Metric
RNG
FIVN
CSCO
Quick Ratio
0.934.971.10
Current Ratio
1.345.531.37
Interest Coverage
−3.36−12.8933.76
Quick Ratio
RNG
FIVN
CSCO

Profitability

Metric
RNG
FIVN
CSCO
Return on Assets (Normalized)
15.30%10.88%17.02%
Return on Equity (Normalized)
35.02%38.38%
Return on Invested Capital (Normalized)
25.91%11.03%30.59%
Return on Assets
RNG
FIVN
CSCO
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