Since April 2025, Amdocs has been in a holding pattern, posting a small loss of 1% while floating around $82.43. The stock also fell short of the S&P 500’s 26.5% gain during that period.
Is now the time to buy Amdocs, or should you be careful about including it in your portfolio? Get the full breakdown from our expert analysts, it’s free for active Edge members.
Why Do We Think Amdocs Will Underperform?
We're swiping left on Amdocs for now. Here are three reasons why DOX doesn't excite us and a stock we'd rather own.
1. Backlog Is Unchanged, Sales Pipeline Stalls
We can better understand Enterprise Networking companies by analyzing their backlog. This metric shows the value of outstanding orders that have not yet been executed or delivered, giving visibility into Amdocs’s future revenue streams.
Over the last two years, Amdocs failed to grow its backlog, which came in at $4.15 billion in the latest quarter. This performance was underwhelming and shows the company faced challenges in winning new orders. It also suggests there may be increasing competition or market saturation. 
2. Projected Revenue Growth Shows Limited Upside
Forecasted revenues by Wall Street analysts signal a company’s potential. Predictions may not always be accurate, but accelerating growth typically boosts valuation multiples and stock prices while slowing growth does the opposite.
Over the next 12 months, sell-side analysts expect Amdocs’s revenue to stall. While this projection indicates its newer products and services will fuel better top-line performance, it is still below the sector average.
3. Free Cash Flow Margin Dropping
If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.
As you can see below, Amdocs’s margin dropped by 3.2 percentage points over the last five years. If its declines continue, it could signal increasing investment needs and capital intensity. Amdocs’s free cash flow margin for the trailing 12 months was 13.7%.
Final Judgment
We cheer for all companies making their customers lives easier, but in the case of Amdocs, we’ll be cheering from the sidelines. With its shares lagging the market recently, the stock trades at 11× forward P/E (or $82.43 per share). At this valuation, there’s a lot of good news priced in - we think other companies feature superior fundamentals at the moment. We’d recommend looking at a top digital advertising platform riding the creator economy.
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