The software-as-a-service (SaaS) model has skyrocketed in popularity in the last couple of years as it offers cutting-edge software solutions without demanding massive upfront spending. With organizations increasingly digitalizing and adopting cloud-based software solutions to support a hybrid workforce in the post-pandemic era, the demand for SaaS solutions should keep rising.
The simplicity, agility, cost-effectiveness, increased accessibility, and security offered by SaaS have made it the most reliable option for numerous businesses. According to a report by Gartner, the service-based cloud application industry will be worth $143.7 billion by 2022.
Given the industry’s strong growth prospects, fundamentally sound SaaS stocks WM Technology, Inc. (MAPS), The Sage Group plc (SGPYY), and The Descartes Systems Group Inc. (DSGX) could be good additions to one’s portfolio at their current dips.
WM Technology, Inc. (MAPS)
MAPS provides e-commerce and compliance software solutions to retailers and brands in the cannabis market in the United States, Canada, and internationally. The company also offers advertising solutions; Sprout, a customer relationship management solution; and Cannveya, a delivery, and logistics software solution.
MAPS’ total revenue increased 39.6% from the prior-year quarter to $57.45 million in the fiscal first quarter ended March 31, 2022. The cash balance for the quarter came in at $55.86 million, reflecting an increase of 184.9% year-over-year.
The consensus EPS estimate for the fiscal year ending December 2022 represents a 94.9% improvement year-over-year. The consensus revenue estimate of $260.58 million for the same period represents a 34.9% increase from the previous year.
MAPS has lost 19% over the past month to close the last trading session at $5.51.
MAPS’ strong fundamentals are reflected in its POWR Ratings. The POWR ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
MAPS has a B grade in Quality and Value. It is ranked #6 of 26 stocks in the Software – SAAS industry.
Beyond what is stated above, we’ve also rated MAPS for Momentum, Stability, Sentiment, and Growth. Get all the MAPS ratings here.
The Sage Group plc (SGPYY)
Based in Newcastle upon Tyne, United Kingdom, SGPYY provides accounting and business management solutions and services for small and medium businesses in North America, Europe, and internationally.
On April 22, 2022, SGPYY announced the acquisition of Mateo cloud savings and loan software from MAS Integrated Solutions to help non-profit organizations better manage programs that involve a revolving loan fund. This should enable SGPYY to provide value-added services to the non-profit sector, thereby helping the company expand its market segment.
SGPYY’s recurring revenue increased 8% year-over-year to £429 million ($452.27 million) in the fiscal first quarter, while its total organic revenue improved 5% year-over-year to £458 million ($482.84 million).
Analysts expect SGPYY’s revenue for the fiscal year ending September 2023 to be $2.55 billion, indicating an increase of 7.1% year-over-year.
Over the past month, the stock has slumped 10.6% to close yesterday’s trading session at $34.37.
It is no surprise that SGPYY has an overall rating of B, equating to Buy in our POWR Ratings system. The stock also has a B grade in Value, Stability, and Quality. In the same industry, it is ranked #4.
In addition to the POWR Ratings I’ve just highlighted, you can see the SGPYY’s ratings for Growth, Momentum, and Sentiment here.
The Descartes Systems Group Inc. (DSGX)
Headquartered in Waterloo, Canada, DSGX provides cloud-based logistics and supply chain management solutions that enhance the productivity, performance, and security of logistics-intensive businesses worldwide.
In April, DSGX announced the acquisition of Foxtrot, a leading provider of machine learning-based mobile route execution solutions; to leverage the company’s advanced machine learning algorithms and technology. This should enhance DSGX’s wider route planning and execution solution suite and complement its investment in GreenMile, a retail food and beverage distribution vertical.
For the fiscal year ended January 31, 2022, DSGX’s revenue increased 21.8% year-over-year to $424.69 million. Its gross profit grew 24.8% from the previous year to $322.88 million. Income from operations for the year stood at $103.43 million, reflecting a 44.9% increase year-over-year. Moreover, its EPS was $1, up 63.9% from the previous year.
DSGX’s revenue for the quarter ended April 2022 is expected to be $114.05 million, indicating a 15.4% year-over-year growth. Also, the company’s revenue is expected to increase 12.7% year-over-year to $478.61 million in the current fiscal year.
DSGX’s stock has slumped 18.5% over the past month to close the last trading session at $57.23.
DSGX’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, equating to Buy in our POWR Ratings system.
The company also has a B grade in Quality, Stability, and Sentiment. The stock is ranked #1 in the same industry. Click here to get DSGX’s ratings for Growth, Value, and Momentum.
MAPS shares were trading at $5.09 per share on Monday afternoon, down $0.67 (-11.63%). Year-to-date, MAPS has declined -14.88%, versus a -15.26% rise in the benchmark S&P 500 index during the same period.
About the Author: Komal Bhattar
Komal's passion for the stock market and financial analysis led her to pursue investment research as a career. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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