One-glance verdict
Undervalued
$62.45 our estimate vs market $1.92
Wall Street consensus: $5.29 (-91.5% lower than our fair-value estimate)
97% below our estimate, below the bear case
Fundamentals snapshot
Endava plc
DAVA · NYQ · Technology · Software - Infrastructure
Current price
$1.92
52-week range
$1.60 - $9.88
Market cap
$101.46M
Balance sheet
Stretched
2.95x Stretched
Net debt $251.88M. Interest coverage shows how many times profit covers the interest bill.
What stands out
2 Rewards
3 Risks
2 rewards · 3 risks
- Reward Revenue grew 4.3% last year.
- Reward Free cash flow was positive in 4/10 years.
- Risk Return on equity was -99.8% last year — the company lost money on shareholders' equity.
- Risk Operating margin compressed from 14.6% to -3.4% over 3 years.
What this company does
Endava plc
Endava acts as an expert technology team for other companies, helping them design, build, and run their custom software and digital systems. The company earns its revenue (the total money it brings in from sales) by charging fees to a wide range of clients, from banks to healthcare providers, who need this specialized help. This is important because nearly every business today needs advanced technology to compete, but many don't have the in-house staff to create it themselves.
How the company got here
Endava was started in London in 2000 and became what it is today through the 2006 merger of a UK-based consulting firm and a software company from Eastern Europe. This combination allowed them to offer technology consulting from the UK while doing the software development work in less expensive locations. The company has grown by acquiring other tech firms, which helped it expand into new regions like Latin America. In 2018, Endava had its initial public offering (an IPO, which is when a private company first sells shares of stock to the public) and is now traded on the New York Stock Exchange.
What it actually does
Endava is a technology consulting company that other businesses hire to help design, build, and operate their software and digital products. Think of them as a team of outside experts that a company can bring in for specific tech projects, like moving their systems to the cloud (storing and accessing data over the internet instead of on local servers), creating a new mobile app, or modernizing their payment systems. They work with large companies across many industries, including finance, healthcare, retail, and media, helping them with everything from the initial idea to the final product.
Payments and Financial Services
This is Endava's largest business area, making up about half of its sales. Companies in banking, insurance, and payments hire Endava to help them build and improve the technology that handles their customers' money. This could involve creating more secure payment systems, developing mobile banking apps, or helping financial companies move their complex operations to the cloud. These clients pay Endava for their expertise in building modern, reliable, and secure financial technology.
TMT (Technology, Media, and Telecom)
This segment represents about a quarter of the company's business. It serves technology companies, media and entertainment firms, and telecommunications providers. For example, a media company might hire Endava to build a new streaming service, or a telecom company might need help creating software to manage its network. These clients pay Endava to develop custom software and digital platforms that help them stay competitive and engage with their customers.
Other
This part of the business includes a wide variety of other industries and makes up the remaining portion of Endava's revenue. This includes clients in retail and consumer goods, healthcare, automotive, and travel. For instance, a retail company might hire Endava to build a new e-commerce website, or a car manufacturer could use their services to develop software for their vehicles. This diverse group of clients pays for specialized technology solutions tailored to their specific industry needs.
What management is betting on now
Endava's leadership is heavily focused on artificial intelligence (AI) as a major area for future growth. They are positioning the company to help clients use AI to improve their operations, from modernizing old systems to creating new, AI-powered products. The company is also concentrating on expanding its business in North America and securing more large, long-term contracts with clients. This strategy involves investing in AI capabilities and building a reputation as an expert partner for companies looking to navigate the shift to AI-driven business.
Price history
How the share price has moved
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Is it cheap or expensive?
Fair value $62.45 vs current price $1.92
Wall Street consensus is the average analyst price target: $5.29 (-91.5% lower than our fair-value estimate).
Our most-likely fair value is $62.45 a share — about 3,152.9% above today's price of $1.92, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Stretched
Net debt $251.9M. Interest coverage 2.9x.
Net debt
$251.88M
Interest coverage
2.95x
Endava plc's profit covers its interest bill about 2.9 times over. and 1 peers sit below 1x, which is the danger zone where profit does not fully cover the interest bill.
Stretched
Worse cushion
Baseline
Better cushion
DAVA
BASELINE
Endava plc
Total debt $315.93M Interest coverage 2.95x This is the baseline the peer rows are being compared against.
Total debt $517.85M Interest coverage 6.18x +110% vs DAVA Carries about 2.1x more debt cushion than DAVA.
Total debt $152.24M Interest coverage 301.10x +10,124% vs DAVA Carries about 102.2x more debt cushion than DAVA.
Total debt $143.33M Interest coverage 4.59x +56% vs DAVA Carries about 1.6x more debt cushion than DAVA.
Total debt $16.71M Interest coverage -0.09x -100% vs DAVA This peer has almost no interest-payment cushion compared with DAVA.
What you should know
The case for and against DAVA
2 Rewards
3 Risks
Rewards
-
Revenue grew 4.3% last year.
-
Free cash flow was positive in 4/10 years.
Risks
-
Return on equity was -99.8% last year — the company lost money on shareholders' equity.
-
Operating margin compressed from 14.6% to -3.4% over 3 years.
-
Insider ownership is only 1.0% (peer median: 3.0%).
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
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Forward P/E
2.29x
P/B
0.44x
P/S
0.14x
EV/EBITDA
9.68x
PEG ratio
0.28x
Profitability
How much profit each dollar creates
Gross margin
21.9%
Operating margin
-3.4%
Net margin
-56.1%
ROE
-99.8%
ROA
0.3%
Health
Liquidity and balance-sheet strength
Debt / equity
1.38x
Current ratio
2.06x
Quick ratio
2.06x
Total debt
$315.93M
Total cash
$64.05M
Growth
How the business has been compounding
Revenue TTM
$963.38M
Revenue 5Y CAGR
5.7%
EPS TTM
-10.25
EPS 5Y CAGR
-36.9%
Cash flow
How much cash the business throws off
Operating CF TTM
$69.87M
Free CF TTM
$63.65M
FCF margin
6.6%
Dividend
Shareholder payout
Yield
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Payout ratio
0.0%
Last ex-div date
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