AvidXchange trades at $9.93 and has moved in lockstep with the market. Its shares have returned 17.9% over the last six months while the S&P 500 has gained 16.8%.
Is there a buying opportunity in AvidXchange, or does it present a risk to your portfolio? Get the full stock story straight from our expert analysts, it’s free.
Why Is AvidXchange Not Exciting?
We're cautious about AvidXchange. Here is one reason why AVDX doesn't excite us and a stock we'd rather own.
Previous Growth Initiatives Have Lost Money
Return on equity, or ROE, tells us how much profit a company generates for each dollar of shareholder equity, a key funding source for banks. Over a long period, banks with high ROE tend to compound shareholder wealth faster through retained earnings, buybacks, and dividends.
Over the last five years, AvidXchange has averaged an ROE of negative 18.6%, a bad result not only in absolute terms but also relative to the majority of firms putting up 25%+. It also shows that AvidXchange has little to no competitive moat.
Final Judgment
AvidXchange isn’t a terrible business, but it isn’t one of our picks. That said, the stock currently trades at 36.1× forward P/E (or $9.93 per share). At this valuation, there’s a lot of good news priced in - we think there are better opportunities elsewhere. We’d suggest looking at the most entrenched endpoint security platform on the market.
Stocks We Would Buy Instead of AvidXchange
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