The software company based in Weßling near Munich has shown above-average growth dynamics for years. The trend is intact and should take the stock to new heights. From Christian Ingerl
Software is currently very popular, in the truest sense of the word. Snowflake recently made its debut on the stock exchange with more than 100 times the expected proceeds. But it can also be invested more cheaply in the sector, man and machine (M + M) is already available for 3.6 times the 2020 sales. Admittedly, the comparison is a bit slow. However, this does not detract from the fact that interesting software developers can also be found in this country. At M + M, which was founded in 1983, sales and profit curves have been pointing upwards for years, with results showing disproportionate growth. The Ebitda margin almost doubled from 7.8 percent in 2015 to 14.8 percent in 2019. Even Corona cannot stop the trend: In the first half of the year, M + M achieved a return of 15.3 percent.
Both business areas ensure growth in the group: on the one hand the profitability pearl Open Mind, on the other hand the system house. The former subsidiary sells CAM software with which, among other things, highly complex and precise drilling and milling work can be carried out in a fraction of the time normally required. Bayern’s solutions are used in numerous sectors such as industry or mechanical engineering. While the software ensures the return, the business is dominated by the system house in terms of sales. Behind this is the distribution of Autodesk programs and service.
Above all, there are growth opportunities in the software sector. For example, M + M launched the eXs program in 2019, which enables the efficient planning and management of large projects such as those that arise in the railways or in the energy supply. According to SMC analyst Adam Jakubowski, the software offers attractive prospects, especially given the growing e-mobility. According to the expert, topics such as the renewal of the transport infrastructure and increasing digitalization should provide a tailwind for M + M.
Potential for surprise
A growth dynamic that is above the industry average with recently clearly disproportionately increasing profits, coupled with high cost discipline and a solid balance sheet structure form a stable foundation. The further prospects provide for price fantasy for the M + M share. There could already be a positive surprise in this year. In order to reach the upper range of the profit target, growth in the second half of the year should decrease slightly compared to the first. Hard to imagine, since the second quarter should have been the worst due to Corona. The prognosis therefore sounds conservative.
Source: BÖRSE ONLINE