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($$$MR. MARKET$$$ is a proprietary investor and does not provide individual financial advice. The stocks mentioned on this forum do not represent individual buy or sell recommendations and should not be viewed as such. Individual investors should consider speaking with a professional investment adviser before making any investment decisions.)
I don’t know much about computers or computer software, but what I do know is that if you own a company and don’t have a computer, or computer software, your company is not going to be very competitive. Having said that, no one who owns or runs a company knows much about how their computer works. Sure, they hire some guy to be the CIO who makes a lot of money and then promises the CEO that his computer is going to work when he wants it to. But what you didn’t know is that the CIO just calls some other company to come in and take care of all of their computers and computer software. That’s right, they outsource it, because there someone out there than knows more about their computer than they do. Once they outsource, they are basically screwed, because they have to pay as much money to the software developer as the software developer wants. If they don’t the software developer will leave, and all of the company’s computers will be all blue screens and broken.
Yesterday I bought stock in Luxoft Holding, Inc (LXFT) at 75.75. I will sell it in 4 to 6 weeks at 87.30. Here’s why I like LXFT:
You have to love the chart.
LXFT stock is up 98% in the last 12 months. That’s better than 8% per month. That’s a lot better than what you get in your savings account. The stock trades at a PE of 35.6, which is a little bit pricey but not so much when you consider the forward PE of 22.6. As companies need to spend more money on software development to support their growth, expect this chart trend to continue as well.
Luxoft Holding, Inc., together with its subsidiaries, provides software development services and IT solutions to multinational corporations primarily in Western Europe and North America. The company offers application software development, software architecture design, performance engineering, optimization and testing, process consulting, and software quality assurance services; functional specification and mock-ups, product design, engineering, automated testing, maintenance, support, and performance engineering services; and IT strategy, software engineering process, and data security consulting services. Its products comprise Horizon, an enterprise risk management and visualization software; SuperCloud that enables data center and cloud service providers to deploy and manage lifecycles of virtual network function and software defined networking applications; Twister, an open source test automation solution for the enterprises communications market; and iStockTrack to build mobile applications for iOS-based devices for financial services sector. In addition, the company offers TEORA, a framework for developing automotive human machine interface (HMI); Populus, a tool chain for HMI design and development, and the deployment of automotive user interfaces for distributed embedded systems; AllView, a user-experience demonstrator that links instrument cluster, head unit, and mobile devices; Augmented Reality Solution, a platform to implement a range of in-car advanced driver assistance system functionality; and Retail Engagement Suite, a connected device platform for in-store customer experience that targets retailers and brands to adapt new engagement models inside their retail stores. It serves financial services, automotive and transport, travel and aviation, technology, telecom, and energy industry verticals. The company was founded in 2000 and is headquartered in Zug, Switzerland. Luxoft Holding, Inc. is a subsidiary of IBS Group Holding Limited.
Luxoft specializes in developing complex software, primarily focused on the middle and front office of an enterprise. Capital markets and wealth management generate about two-thirds of the company's sales. Automotive and telecommunications are the other two segments it focuses on. Two of LXFT’s biggest customers are Deutsche Bank and UBS. Those are two big banks which spend jegundas amount of money on computer software. The CEO of Deutsche Bank said that they are going to improve their IT systems and the bank is going through a very significant transformational effort to actually compete effectively and become much stronger on the IT floor. LXFT will be able to milk that cow for a long time. The main growth drivers in the financial services are: digital transformation, new disruptive banking models; pressure to comply with the regulations; need for standardization, cost control and transparency; demand for advanced business solutions and associated consulting. Since Luxoft is an extension of a company's high-tech and R&D efforts, as these big companies grow, so shall LXFT.
Digital transformation in the banking industry is becoming more and more of a resounding theme. LXFT supports the transition from banking dependent on the physical structure to the virtual ecosystem that can accommodate mobile and Internet-driven end user involvement. It's about leveraging the potential of big data and analytics for better one-on-one interactions, more powerful marketing, and consumer targeting. Better digital solutions and better analytic tools lead to improved match of products to the needs of the customers and allows integration with social networks. Also, automated data analytics allow for faster decision-making, more efficient client on-boarding, and faster launch of new products.
Also, one of the offerings delivered by Luxoft market focuses on the unparalleled ability to help banks seamlessly retire software systems, to take over management of the entire domains that are have being sunset, and help run day-to-day operations and software support while the banks are gradually inviting related trading portfolios. Today, when many banks are going through reorganizations and restructurings, this service is in high demand.
LXFT also sells a lot of high tech junk to automotive companies who keep putting in human interaction stuff into their automobiles. I hate all that crap, but people seem to like it in their new cars. Then again, I never buy new cars. But if people want to talk to their car while they are driving, so be it. In computer vision and augmented reality, they have successfully implemented the first proof of concept in existing vehicles. Assuring functionalities like navigation overlay on the front camera video stream, object recognition and warning, as well as object highlighting, like for instance the destination building that you're heading towards. LXFT will make software to support it. They make some kind of software called Populus which has already been used in more than 7 million cars.
During the past quarter, LXFT’s payroll reached 10,000 employees, adding quality talent from all over the world to their engineering pool. Attrition remains near historical lows of 10% to 11%. They are adding great talent because their business supports it and the computer geeks they hire love working for them. Happy employees usually translates to fat and happy profits.
When LXFT issued their IPP, they promised 20% year over year revenue growth. Well, they hit 30%. In fact, their quarter over quarter growth has been 9%. Since 2013, they have grown revenue from $315M to $521M. Their 5 year strategic plan indicates revenues in excess of $1 billion and a market cap of $3 billion and they see 20% earnings growth to fuel that. CAGR for free cash flow is 41%
They promised M&A acquisitions to fuel growth and have already closed 3 valuable M&A deals. They have taken almost all of the debt off of their balance sheet so, if need be, they can make more sizable acquisitions using new debt. Their headcount has grown from 5,800 in 2013 to 10,000 in 2015.
We can talk until we’re blue in the face about banks using smartphones and self driving cars, but at the end of the day the reason why I love LXFT is about its earnings earnings earnings.
Last month, LXFT announced their earnings for Three Months Ended September 30, 2015:
· US GAAP revenue amounted to $161.5 million, an increase of 29.1% year over year
· Diluted earnings per share (EPS) on a US GAAP basis was $0.67, compared to $0.54 in the year-ago quarter and $0.43 in the previous quarter
Highlights – Six Months Ended September 30, 2015
· US GAAP revenue amounted to $309.6 million, an increase of 30.4% year over year.
· Diluted EPS on a US GAAP basis was $1.11, compared to $0.92 in the first half of last year, representing 20.7% increase over the same period last year
Some very nice trends here. ANAL-ysts project full year revenues of $664 million resulting in $2.83/share. The Company itself is increasing its original revenue and EPS guidance for the financial year ending March 31, 2016:
Revenue is expected to reach at least $645.5 million, an increase of at least 24.0% year over year, compared to at least $640.3 million, an increase of at least 23.0% year over year. Fully diluted EPS is expected to reach at least $2.05 on a US GAAP basis, compared to $2.02 previously
Now hold on just a cotton pickin minute. These guys blew away ANAL-ysts estimates in each of the last 4 quarters. With impending rate hikes, banks are going to make more money and spend more money on IT. Every time you turn on the news, you read more about self driving vehicles or you see commercials with Peyton Manning talking to his car. $$$MR. MARKET$$$ projects earnings of $3.01/share on sales of $742 million. If you take the existing PE of 35.6 and multiply it by earnings estimate, you get a stock price of 35.6 x $3.01 = $107.15 which is well passed my selling target.
Why am I so confident? Just listen to what their CEO had to say:
“I am pleased to announce another strong set of earnings for the quarter and the first half of our financial year built upon a continuously high level of demand for complex software development services, end-to-end solutions, and technology consulting,” stated Dmitry Loschinin, CEO and President of Luxoft Holding, Inc. “Our end-to-end offerings created organically and complemented by acquisitions over the past year helped us win several landmark contracts with High Potential Accounts (HPAs) and maintain healthy pipeline of opportunities ahead. We have secured four new HPAs in the past quarter: two in automotive, one in telecom and one in financial services. Credit Suisse, which made it into a Top 5 accounts in the second quarter, and another client, a major online travel conglomerate, are now part of our Top 10 account list.
Thus, an annual increase in revenues generated by our core verticals during the first half of the year ranged between 26% and 57%, which leads us to believe that our strategy of focusing on select niche domain expertise and becoming a business IT solutions specialist provider is paying off.”
Since inception, Luxoft has been a consistent picture of strong growth and stable margin performance. This quarter is not an exception, as we delivered another set of solid results, quarterly and for the first half. We believe the main reason for the ongoing strength of our business is the relevance of our solutions and expertise in today's IT demand environment and ever-present high quality of delivery, something we have never compromised on.”
One thing that will not be compromised is LXFT’s stock price which I am going to see through all the way to 87.30. But I don’t need that high tech crap that their selling, I’ll take my stock gains to the bank and have the teller count my Benjamins in front of me at the window.
I am HUGE!!!
$$$MR. MARKET$$$
www.mrmarketishuge.com
($$$MR. MARKET$$$ is a proprietary investor and does not provide individual financial advice. The stocks mentioned on this forum do not represent individual buy or sell recommendations and should not be viewed as such. Individual investors should consider speaking with a professional investment adviser before making any investment decisions.)
I don’t know much about computers or computer software, but what I do know is that if you own a company and don’t have a computer, or computer software, your company is not going to be very competitive. Having said that, no one who owns or runs a company knows much about how their computer works. Sure, they hire some guy to be the CIO who makes a lot of money and then promises the CEO that his computer is going to work when he wants it to. But what you didn’t know is that the CIO just calls some other company to come in and take care of all of their computers and computer software. That’s right, they outsource it, because there someone out there than knows more about their computer than they do. Once they outsource, they are basically screwed, because they have to pay as much money to the software developer as the software developer wants. If they don’t the software developer will leave, and all of the company’s computers will be all blue screens and broken.
Yesterday I bought stock in Luxoft Holding, Inc (LXFT) at 75.75. I will sell it in 4 to 6 weeks at 87.30. Here’s why I like LXFT:
You have to love the chart.
LXFT stock is up 98% in the last 12 months. That’s better than 8% per month. That’s a lot better than what you get in your savings account. The stock trades at a PE of 35.6, which is a little bit pricey but not so much when you consider the forward PE of 22.6. As companies need to spend more money on software development to support their growth, expect this chart trend to continue as well.
Luxoft Holding, Inc., together with its subsidiaries, provides software development services and IT solutions to multinational corporations primarily in Western Europe and North America. The company offers application software development, software architecture design, performance engineering, optimization and testing, process consulting, and software quality assurance services; functional specification and mock-ups, product design, engineering, automated testing, maintenance, support, and performance engineering services; and IT strategy, software engineering process, and data security consulting services. Its products comprise Horizon, an enterprise risk management and visualization software; SuperCloud that enables data center and cloud service providers to deploy and manage lifecycles of virtual network function and software defined networking applications; Twister, an open source test automation solution for the enterprises communications market; and iStockTrack to build mobile applications for iOS-based devices for financial services sector. In addition, the company offers TEORA, a framework for developing automotive human machine interface (HMI); Populus, a tool chain for HMI design and development, and the deployment of automotive user interfaces for distributed embedded systems; AllView, a user-experience demonstrator that links instrument cluster, head unit, and mobile devices; Augmented Reality Solution, a platform to implement a range of in-car advanced driver assistance system functionality; and Retail Engagement Suite, a connected device platform for in-store customer experience that targets retailers and brands to adapt new engagement models inside their retail stores. It serves financial services, automotive and transport, travel and aviation, technology, telecom, and energy industry verticals. The company was founded in 2000 and is headquartered in Zug, Switzerland. Luxoft Holding, Inc. is a subsidiary of IBS Group Holding Limited.
Luxoft specializes in developing complex software, primarily focused on the middle and front office of an enterprise. Capital markets and wealth management generate about two-thirds of the company's sales. Automotive and telecommunications are the other two segments it focuses on. Two of LXFT’s biggest customers are Deutsche Bank and UBS. Those are two big banks which spend jegundas amount of money on computer software. The CEO of Deutsche Bank said that they are going to improve their IT systems and the bank is going through a very significant transformational effort to actually compete effectively and become much stronger on the IT floor. LXFT will be able to milk that cow for a long time. The main growth drivers in the financial services are: digital transformation, new disruptive banking models; pressure to comply with the regulations; need for standardization, cost control and transparency; demand for advanced business solutions and associated consulting. Since Luxoft is an extension of a company's high-tech and R&D efforts, as these big companies grow, so shall LXFT.
Digital transformation in the banking industry is becoming more and more of a resounding theme. LXFT supports the transition from banking dependent on the physical structure to the virtual ecosystem that can accommodate mobile and Internet-driven end user involvement. It's about leveraging the potential of big data and analytics for better one-on-one interactions, more powerful marketing, and consumer targeting. Better digital solutions and better analytic tools lead to improved match of products to the needs of the customers and allows integration with social networks. Also, automated data analytics allow for faster decision-making, more efficient client on-boarding, and faster launch of new products.
Also, one of the offerings delivered by Luxoft market focuses on the unparalleled ability to help banks seamlessly retire software systems, to take over management of the entire domains that are have being sunset, and help run day-to-day operations and software support while the banks are gradually inviting related trading portfolios. Today, when many banks are going through reorganizations and restructurings, this service is in high demand.
LXFT also sells a lot of high tech junk to automotive companies who keep putting in human interaction stuff into their automobiles. I hate all that crap, but people seem to like it in their new cars. Then again, I never buy new cars. But if people want to talk to their car while they are driving, so be it. In computer vision and augmented reality, they have successfully implemented the first proof of concept in existing vehicles. Assuring functionalities like navigation overlay on the front camera video stream, object recognition and warning, as well as object highlighting, like for instance the destination building that you're heading towards. LXFT will make software to support it. They make some kind of software called Populus which has already been used in more than 7 million cars.
During the past quarter, LXFT’s payroll reached 10,000 employees, adding quality talent from all over the world to their engineering pool. Attrition remains near historical lows of 10% to 11%. They are adding great talent because their business supports it and the computer geeks they hire love working for them. Happy employees usually translates to fat and happy profits.
When LXFT issued their IPP, they promised 20% year over year revenue growth. Well, they hit 30%. In fact, their quarter over quarter growth has been 9%. Since 2013, they have grown revenue from $315M to $521M. Their 5 year strategic plan indicates revenues in excess of $1 billion and a market cap of $3 billion and they see 20% earnings growth to fuel that. CAGR for free cash flow is 41%
They promised M&A acquisitions to fuel growth and have already closed 3 valuable M&A deals. They have taken almost all of the debt off of their balance sheet so, if need be, they can make more sizable acquisitions using new debt. Their headcount has grown from 5,800 in 2013 to 10,000 in 2015.
We can talk until we’re blue in the face about banks using smartphones and self driving cars, but at the end of the day the reason why I love LXFT is about its earnings earnings earnings.
Last month, LXFT announced their earnings for Three Months Ended September 30, 2015:
· US GAAP revenue amounted to $161.5 million, an increase of 29.1% year over year
· Diluted earnings per share (EPS) on a US GAAP basis was $0.67, compared to $0.54 in the year-ago quarter and $0.43 in the previous quarter
Highlights – Six Months Ended September 30, 2015
· US GAAP revenue amounted to $309.6 million, an increase of 30.4% year over year.
· Diluted EPS on a US GAAP basis was $1.11, compared to $0.92 in the first half of last year, representing 20.7% increase over the same period last year
Some very nice trends here. ANAL-ysts project full year revenues of $664 million resulting in $2.83/share. The Company itself is increasing its original revenue and EPS guidance for the financial year ending March 31, 2016:
Revenue is expected to reach at least $645.5 million, an increase of at least 24.0% year over year, compared to at least $640.3 million, an increase of at least 23.0% year over year. Fully diluted EPS is expected to reach at least $2.05 on a US GAAP basis, compared to $2.02 previously
Now hold on just a cotton pickin minute. These guys blew away ANAL-ysts estimates in each of the last 4 quarters. With impending rate hikes, banks are going to make more money and spend more money on IT. Every time you turn on the news, you read more about self driving vehicles or you see commercials with Peyton Manning talking to his car. $$$MR. MARKET$$$ projects earnings of $3.01/share on sales of $742 million. If you take the existing PE of 35.6 and multiply it by earnings estimate, you get a stock price of 35.6 x $3.01 = $107.15 which is well passed my selling target.
Why am I so confident? Just listen to what their CEO had to say:
“I am pleased to announce another strong set of earnings for the quarter and the first half of our financial year built upon a continuously high level of demand for complex software development services, end-to-end solutions, and technology consulting,” stated Dmitry Loschinin, CEO and President of Luxoft Holding, Inc. “Our end-to-end offerings created organically and complemented by acquisitions over the past year helped us win several landmark contracts with High Potential Accounts (HPAs) and maintain healthy pipeline of opportunities ahead. We have secured four new HPAs in the past quarter: two in automotive, one in telecom and one in financial services. Credit Suisse, which made it into a Top 5 accounts in the second quarter, and another client, a major online travel conglomerate, are now part of our Top 10 account list.
Thus, an annual increase in revenues generated by our core verticals during the first half of the year ranged between 26% and 57%, which leads us to believe that our strategy of focusing on select niche domain expertise and becoming a business IT solutions specialist provider is paying off.”
Since inception, Luxoft has been a consistent picture of strong growth and stable margin performance. This quarter is not an exception, as we delivered another set of solid results, quarterly and for the first half. We believe the main reason for the ongoing strength of our business is the relevance of our solutions and expertise in today's IT demand environment and ever-present high quality of delivery, something we have never compromised on.”
One thing that will not be compromised is LXFT’s stock price which I am going to see through all the way to 87.30. But I don’t need that high tech crap that their selling, I’ll take my stock gains to the bank and have the teller count my Benjamins in front of me at the window.
I am HUGE!!!
$$$MR. MARKET$$$
www.mrmarketishuge.com
($$$MR. MARKET$$$ is a proprietary investor and does not provide individual financial advice. The stocks mentioned on this forum do not represent individual buy or sell recommendations and should not be viewed as such. Individual investors should consider speaking with a professional investment adviser before making any investment decisions.)
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