Nice: Israeli data manager
Would you entrust your data to an Israeli company? In this case, you wouldn't be wrong. This company is dedicated to preventing financial crime with state-of-the-art systems. Plus, that's not all it does. Are its currently undervalued shares interesting? That's what we look at in this analysis.
Founded in 1986, the company specializes in developing technologies that enable big data processing and analysis, voice and text analytics, and offers tools to optimize contact center processes.
$NICE+2.0% provides innovative contact center solutions that improve the customer experience and increase performance. In addition, the company offers fraud detection and money laundering systems to help organizations protect against financial risks and comply with regulations. Cloud solutions are also an important part of NICE's portfolio, providing scalability and flexibility to its software tools. Cloud services are used by many of the world's leading companies and organisations.
The company invests heavily in research and development to continually innovate and bring new and better products to market. In addition to technological advancements, the company is committed to sustainability and social responsibility, supporting environmental initiatives and engaging in various community projects.
Interesting factA: The company was one of the first to develop voice analytics technologies that enable organizations to extract valuable information from phone calls. These technologies make fraud detection much easier today.
Management
Barak Eilam - CEO
Since becoming CEO in 2014, Barak has transformed NICE into a leader in cloud, analytics, digital and artificial intelligence (AI) through breakthrough innovations and strategic acquisitions. Over the past 9 years, NICE's revenue has more than doubled, growth has accelerated significantly, and its profitability has more than tripled.
Barak began his career as an engineer at NICE in 1999 and has held several leadership positions in R&D, product management and sales during his 24 years with the company. He founded and led the company's analytics business and spearheaded NICE's transformation into an enterprise software company. Prior to becoming CEO, he served as President of NICE Americas.
Barak himself is the author of several patents and was named CEO of 2020 by Calcalist, Israel's leading financial newspaper.Prior to joining NICE, Eilam was an officer in the Israeli Army Intelligence Corps.
Barak holds a B.Sc. in electrical engineering from Tel Aviv University. He lives in New Jersey with his wife and two daughters.
If you'd like to know more about the CEO himself, you can check out his personal Linkedinwhere he is very active and shares information about what's going on in the company. But he has a full history of his education and career growth there.
Industry/Specialization of the company
Data analysis and processing: NICE Ltd. specializes in advanced voice and text analytics technologies to extract valuable information from phone calls, emails and chats. The company also provides Big Data processing and analytics solutions, enabling companies to gain deeper insights into their customers' behaviors and needs.
Customer Experience Management: In the area of customer experience management, the company offers tools to optimize contact centers. These solutions include workforce management, quality monitoring, and employee training, which improve contact center efficiency and performance. Analyzing customer interactions then helps companies better understand their customers and improve their overall experience.
Financial crime and risk prevention: In the area of financial crime prevention, the company develops real-time fraud detection systems to protect organizations from financial losses. The company also offers anti-money laundering tools that are designed to meet regulatory requirements and protect financial institutions from the risks associated with illegal activities.
Compliance: $NICE+2.0% provides communication monitoring and recording solutions that help organizations ensure compliance with legal and regulatory requirements. Automating compliance processes increases efficiency and reduces the risk of human error. These solutions are critical for modern enterprises that must meet increasingly stringent regulatory standards.
Cloud-based solutions: NICE also provides flexible and scalable cloud solutions that make it easy to deploy and manage their software tools. These solutions are designed to provide a high level of security and reliability, which is essential for organizations that want to leverage modern technology while protecting sensitive data.
Company profitability and cash
It's not just this year that the company's stock has been falling lower and lower. While they are still above 2019 levels before they started to fall in the wake of covid, they are already very significantly undervalued according to our Fair Price Index. The stock is now trading 44.3% below its fair price under this system.
The company's current market capitalization is $11.49 billion. The company's price is therefore 47% lower than when it was at its absolute peak in 2021. The company employs 8,400 people worldwide.
NICE
NICEFrom a stock split perspective, the company is only very strictly privately held. Only 130,000 shares (that's 0.21% of the company) are so owned. The rest, 63.33 million shares, are distributed to investors. The company's debt is very small, i.e. $570.65 million. The cash available to management is $1.5 billion.
The company's revenue was $1.57 billion in 2019. The operating margins at that time were 11.81%. This brought the net profit to $185.9 million. In 2020, revenue rose to $1.65 billion. Margins moved to 11.93% and net profit was $196.67 million. In 2021, revenue went back up to $1.92 billion. But the profit margin fell to 10.37%. So the profit was still below $200 million or $199.22 million in that year. In the last two years, revenue has been coming up consistently as well as operating margin. Revenue was $2.18 and $2.38 billion. The margins were 12.19% and 14.23%. Well, net income was $265.94 million in 2022 and $338 million last year.
The United States is the largest contributor to the company's revenue, which was $1.99 billion in 2023. That's 83.56% of their total value in 2023. Europe and the Middle East is second. In this part of the world, the company made $244.52 million, which is 10.5% of last year's revenue value. Asia then added $142 million to the company's coffers.
Data analytics and related software sales represent the largest percentage of $NICE+2.0%'s business . This division, which continues to be the main one, earned the company $1.97 billion in revenue in 2023. This is 83.03% of the total revenue value. The company earned the remaining $403 million from financial crime prevention.
In 2017, the company's earnings per share were $NICE+2.0% at $4.1. This was above the market consensus by 1.08%. The next year, EPS increased to $4.69. Even now, the company has managed to beat analysts' estimates. This has sustained it until today. Thus, for the last 7 years, it has always been in the green in this regard. By 2020, earnings per share had reached $5.73. But in the following years, their value began to increase even faster. By 2021, EPS were already $6.52. In the coming year, earnings per share looked at a then-high of $7.62. Last year, the company managed to surpass even that figure when EPS hit $8.79. Growth is expected to continue, according to current estimates. EPS of $13.63 is expected by 2026.
For revenue, the same fairy tale has been playing out in recent years. The company has been able to increase their value every year and beat analysts' estimates. In 2017, the company's revenue was $1+2.0%.35 billion. By 2019, that figure has climbed to $1.58 billion. Even in 2020, when the pandemic broke out, the growth didn't stop. Revenue at that time was $1.66 billion. In the next two years, revenue, like EPS, began to increase faster. In 2021 and 2022, they were $1.93 billion and $2.18 billion, respectively. Last year, revenue hit an all-time high of $2.38 billion.
How have the company's two sectors grown since 2017? The biggest one, with annual sales of $1 billion and $50 million in 2017. Since then, however, that figure has changed a lot. In fact, it has almost doubled. Revenues from this sector got up to $1.97 billion last year. The other sector, which focuses on financial crime, has gone from $280 million in revenue to $403.4 million in the same time period. The company is expected to continue at this set pace. Growth in not only revenue but also earnings per share should continue to accelerate.
Operating expenses
The company has kept its expenses nicely in line with revenue growth. As these grow, it can gradually increase the value of its expenses. In 2010, the company needed $547 million for one quarter. Three years later, it was $834 million. Between 2014 and 2016, there was a decline in spending. Its value fell to $710 million on a quarterly basis. But since this year, the value of spending has only increased. In 2020, their quarterly value was $1.39 billion. This year, expenses have climbed to their highest value to date, which was $2.003 billion. But with the way sales are going, the company can comfortably afford it.
Dividend
Even though the company has been around for a long time, it still hasn't gotten around to paying a dividend. But with the current growth, we can still hope that this will change soon.
Valuation/Comparison with competitors
The valuation of the company in 2010 was quite high by then. The P/E ratio was at 50 points. However, with the only blip in the form of growth in 2014, the P/E has steadily declined until 2016. This was mainly due to slightly rising earnings per share, which were not accompanied by a rise in the share price. Since then, however, the course of the P/E has reversed and its value has started to rise. However, the share price and earnings per share also started to rise. In 2021, the P/E was at a high of 101 points. The stock was also at its peak at that time. But by now, the P/E has dropped significantly. But what has led to this? First, the share price began to decline and second, earnings per share began to grow significantly. This combination brought the P/E down to just under 31 points today.
Rivals
Verint Systems $VRNT+1.0%: is a global provider of software solutions focused on data analytics, customer experience management and security improvement. Verint specializes in several key areas. It is best known for its advanced customer experience management (CXM) technologies, which include tools to optimize contact centers, analyze customer interactions, and improve overall customer service efficiency. These technologies enable organizations to better understand their customers' needs and preferences, contributing to higher satisfaction and loyalty.
Cisco $CSCO+1.8%: Cisco specializes in a wide range of products and solutions that include hardware, software, and services aimed at improving and optimizing enterprise IT infrastructures and communications. Cisco's primary focus is network infrastructure. The company provides advanced solutions for creating, managing, and securing computer networks, including routers, switches, and other devices that enable efficient and reliable communications between devices and users. Cisco also develops wireless networking and connectivity technologies that support modern mobile and IoT applications.
Blue - $NICE+2.0%, Orange - $VRNT+1.0%, Turquoise - $CSCO+1.8%
Of the competitors compared today ,$VNTR has faredthe best over the past 3 years and 7 months . Its stock is up 16% since 2020. In second place by a very small margin is $NICE+2.0%. Shares of this company have managed to increase by 12.11% over the same time period. The worst performing company is $CSCO+1.8%. Its stock has not fared well in recent years and is trading 9.34% lower than it did in 2020. This is despite the company being many times larger than the other two combined by market capitalization. Cisco now has a market capitalization of $181 billion.
Future plans
Continued innovation in artificial intelligence and machine learning: The goal is to improve the ability of its products to analyze and interpret complex data, which will help clients better understand customer needs, optimize operations, and improve fraud detection and security processes. This is a much watched sector right now, so naturally the company is putting a significant amount of effort into it.
Expanding cloud services: the cloud and the services it provides are linked to this. $NICE+2.0% plans to offer more and more functionality through cloud platforms, which will allow customers greater flexibility, scalability and cost-effectiveness. Integration with cloud technologies also supports the modernization of enterprise IT infrastructures and simplifies systems management.
Expansion into new markets: The Company plans to expand into new markets and geographies to reach a broader customer base. This expansion includes not only new regions, but also new sectors and industries where its technologies can bring significant value.
Outlook
The company's stock has weakened very significantly since the peak it was at in 2021. This has potentially opened up an interesting opportunity for investors. According to the Fair Price Index on Bulios, the stock is now more than 44% undervalued. The company has so far failed to recover from the slump that engulfed the entire market in 2022. This has created price support on the chart, which is indicated by the blue horizontal line in the image below. It is priced at $153 per share. Because the company is now thriving and its business is booming, it has almost nothing to stop it with low debt on its back. How do seasoned Wall Street analysts view the stock?
Of the 17 analysts polled, 15 would buy the stock now right away. Their estimates for the coming 12 months call for a possible price increase of up to 107%. If the stock actually succeeds, its stock price would be $346. 2 other analysts would also buy the stock. While their outlook is not as optimistic, they still expect high growth. According to them, it could reach up to 59%. The market is therefore very bullish on the company's stock. How do you view the stock? Do you have it in your portfolio or are you considering it?
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