Enghouse Systems Q4 Revenue Decreases 6.5%

Enghouse Systems (ENGH) reported a lower revenue in Q4, and a slightly higher profit than a year earlier.

Enghouse serves a number of distinct vertical markets through its two business segments, each developing and selling business-oriented application software.

Revenue & Earnings

Revenue came in at C$113.1 million for the quarter ended October 31, a decrease of 6.5% from C$120.9 million in the prior-year quarter. The decrease reflects exceptional revenue during the comparative period due to demand related to COVID-19 in addition to an unfavorable exchange rate.

Meanwhile, Enghouse posted a net income of C$30.2 million (C$0.54 per diluted share) in Q4 2021, compared to a profit of C$29.4 million (C$0.52 per diluted share) in Q4 2020.

For the fiscal year ended October 31, net income was C$92.8 million (C$1.66 per diluted share), compared to C$98.6 million (C$1.77 per diluted share) in 2020. Revenue decreased 7.3% to C$467.2 million.

Enghouse closed the quarter with C$198.8 million in cash, cash equivalents and short-term investments, down from C$251.8 million as of October 31, 2020.

Acquisitions & Dividend

Enghouse closed three acquisitions during the year that met its return on investment (ROI) criteria. The company continues to seek profit-generating acquisitions to increase its revenues and further expand its product line and geographic reach.

The Board of Directors approved a quarterly dividend of C$0.16 per common share payable on February 28, 2022, to shareholders of record at the close of business on February 14, 2022.

Wall Street’s Take

On December 13, RBC Capital analyst Paul Treiber maintained a Buy rating on ENGH and set a price target of C$70. This implies 50.4% upside potential.

Overall, ENGH scores a Moderate Buy consensus rating based on two Buys. The average Enghouse Systems price target of C$67.51 implies 45.1% upside potential to current levels.