By Spotlight Growth
In an age of economic uncertainty and volatility, the Human Resources technology and Human Capital Management (HCM) industries are going through drastic changes. With a tight labor market and increasing inflation, workplace issues have become a priority, not only for small businesses and their employees but also for government officials and investors.
The increased availability of employee self-service portals is one of the most remarkable developments in HR technology. Such portals make it possible for personnel to access data promptly and efficiently from any location. This accessibility is likely to remain and grow through 2023, as companies strive to maintain their most talented staff while negotiating economic uncertainty with talent management initiatives.
The ever-shifting nature of economic policy - from fiscal, regulatory, and monetary policies - is a huge source of instability that has a palpable effect on consumer confidence and economic agent behavior. This uncertainty creates turbulent markets, affecting businesses of all sizes. Companies must stay ahead of the curve by investing in cutting-edge solutions and strategies to manage their workforce efficiently and position for lasting success.
Optimizing and effectively engaging an organization's human capital has been demonstrated to have a profound influence on many organizational KPIs, such as productivity, employee turnover, product quality, work safety, and customer satisfaction. As a result, there is a growing emphasis on the relationship between human resource management (HRM) and human capital management (HCM). HRM centers its attention on the fundamental HR tasks of keeping employee records and administering benefits, yet HCM takes it to the next level, encompassing HRM functions as well as analytical and performance management strategies.
One HCM provider that has been a bright spot for its investors and clients amid the economic turmoil is Asure Software (NASDAQ: ASUR).
Asure's Recent News
Over the past couple of weeks, the U.S. and global banking sector has come into focus, as three U.S. banks close alongside UBS's (NYSE: UBS) fire-sale takeover of rival Credit Suisse (NYSE: CS), a Swiss banking institution that had a rich history of over 170 years in business.
The failure of the Silicon Valley Bank (SVB) has prompted bank runs and instability across the global banking system, as consumers rush to advert losing deposits that exceed the FDIC's $250,000 insurance limit. Despite the government's attempt to cool the panic by providing backing for all deposits at qualified institutions, investors are still selling off banks at a rapid clip.
This is important for Asure Software because the company recently confirmed that it did not have any deposits at the troubled banks SVB or Signature Bank. This has helped the HCM provider side-step excessive market volatility and remain less than $1.00 off its 52-week highs.
Outside of the banking issues, tax day is right around the corner in the United States. Mark your calendars for April 18, 2023, which is when taxes or the request for a six-month extension are due. Asure's recent partnerships with H&R Block (NYSE: HRB) and Intuit's (NASDAQ: INTU) TurboTax will help its small business clients offer streamlined tax preparation for its employees.
Asure's partnership with ZayZoon, a provider of earned wage access and employee financial wellness services, will also be key for its client base amid the economic uncertainty. During times of economic stress, the need for financial wellness, education, and coaching becomes imperative. These services can help employees to remain focused on their current financial situation without causing unnecessary panic or stress.
These key partnerships and integrations are just what Asure's small business clients need to continue optimizing their human capital. As we touched upon at the beginning of this article, small businesses must adopt new and innovative technologies and services to help retain top talent and to remain competitive when searching for new employees. Asure gives small businesses the tools needed to secure and attract top employees.
ASUR Valuation and Growth Outlook
As of this writing, Asure Software has six Wall Street analysts covering its stock. The six analysts all have impressive backgrounds, with ratings between 4 and 5 stars, according to TipRanks. These analysts currently have a consensus rating of "strong buy" with an average 12-month price target of $18.17, which implies an additional potential upside of 31.57% from Asure's current price of $13.81.
While we have covered Asure's analysts' estimates on an overall basis, let's dive into the current analyst consensus estimates for revenue, EBITDA, EBIT, and EPS growth:
Asure Software's current valuation and growth consensus estimates for FY 2023, FY 2024, and FY 2025 provide insight into the company's financial performance and potential future growth. The valuation metrics include EV/Revenue, EV/EBITDA, EV/EBIT, and Price/Earnings, while the growth metrics focus on Revenue Growth, EBITDA Growth, EBIT Growth, and EPS Growth.
For FY 2023, Asure Software's valuation metrics are estimated as follows: EV/Revenue is 2.81x, EV/EBITDA is 17.95x, EV/EBIT is 25.24x, and Price/Earnings is 47.06x. In terms of growth, the company is expected to experience a 10.6% increase in revenue, a 40.7% increase in EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization), a 52.2% increase in EBIT (Earnings Before Interest and Taxes), and a 28.0% increase in EPS (earnings per share).
Moving on to FY 2024, the valuation metrics are projected to be: EV/Revenue at 2.57x, EV/EBITDA at 15.03x, and Price/Earnings at 35.24x. The growth estimates for this year include a 9.4% increase in revenue, a 19.4% increase in EBITDA, and a 33.6% increase in EPS growth.
Lastly, for FY 2025, the valuation metrics are anticipated to be: EV/Revenue at 2.33x, EV/EBITDA at 13.19x, and P/E at 30.80x. The growth projections for this year consist of a 10.2% increase in revenue, a 13.9% increase in EBITDA growth, and a 14.4% increase in EPS growth.
Overall, Asure Software's valuation and growth current consensus estimates indicate a positive outlook for the company's financial performance in the coming years, with increasing revenue, EBITDA, EBIT, and EPS growth.
ASUR Financial Outlook
Asure Software's current consensus estimates for FY 2023, FY 2024, and FY 2025 provide insights into the company's expected financial performance in the coming years. The revenue projections for these fiscal years are $106.01 million, $116.02 million, and $127.90 million, respectively. This indicates a steady revenue growth of 20.64% over the three years.
In terms of EBITDA, the estimates for FY 2023, FY 2024, and FY 2025 are $16.61 million, $19.83 million, and $22.60 million, respectively. This also shows a consistent increase in EBITDA across the three fiscal years. The current analyst consensus EBITDA estimates implies growth of over 36% between 2023 and 2025.
Lastly, the EPS (Earnings Per Share) estimates for Asure Software are $0.29 for FY 2023, $0.39 for FY 2024, and $0.45 for FY 2025. These figures suggest a 55.17% increase in the company's earnings per share over the three years.
Overall, the current consensus estimates for Asure Software indicates a positive outlook for the company's financial performance in the coming years, with consistent growth in revenue, EBITDA, and EPS.
In conclusion, Asure Software's efforts to build a comprehensive, cloud-based HCM platform, as well as partner with other major firms to improve its product and service offerings, are greatly paying off for the company and its investors. After a breakout in 2022, Asure has captivated the attention of Wall Street with its resilience and its quality HCM platform, which is needed now more than ever for small businesses that want to cut costs and streamline their operations amid the economic uncertainty.
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