Veeva Systems logged a -0.2% change during today's morning session, and is now trading at a price of $168.33 per share. The S&P 500 index moved -0.6% and the Nasdaq posted a -0.5% change. VEEV's trading volume is 18,602 compared to the stock's average volume of 1,133,393. Let's dive right into a brief fundamental analysis of Veeva Systems.
Veeva Systems shares moved -23.8% over the last 52 weeks, with a high of $239.67 and a low of $151.02. During this time, the stock lagged the S&P 500 index by -16.0%. As of January 2022, the company's 50-day average price is $172.1046. Veeva Systems Inc. provides cloud-based software for the life sciences industry in North America, Europe, the Asia Pacific, the Middle East, Africa, and Latin America. The large-cap Healthcare company has 5,482 full time employees and is based in Pleasanton, CA. Veeva Systems has not offered any dividends in the last year.
Snapshot of the Company's Operating Margins Consistently Higher Than the None Industry Average with a Stable Trend:
| 2019-01-31 | 2020-01-31 | 2021-01-31 | 2022-01-31 | |
|---|---|---|---|---|
| Revenue (MM) | $862 | $1,104 | $1,465 | $1,851 |
| Revenue Growth | n/a | 28.05% | 32.7% | 26.33% |
| Gross Margins | 71.6% | 72.5% | 72.1% | 72.8% |
| Gross Margins Growth | n/a | 1.26% | -0.55% | 0.97% |
| Operating Margins | 25.8% | 25.9% | 25.8% | 27.3% |
| Operating Margins Growth | n/a | 0.39% | -0.39% | 5.81% |
| Earnings Per Share | $1.47 | $1.9 | $2.36 | $2.63 |
| EPS Growth | n/a | 29.25% | 24.21% | 11.44% |
| Free Cash Flow (MM) | $301 | $433 | $551 | $764 |
| FCF Growth | n/a | 43.87% | 27.29% | 38.68% |
| Capital Expenditures (MM) | -$10 | -$4 | $0 | $0 |
| Net Debt / EBITDA | -2.3 | -1.38 | -1.65 | -2.03 |
Veeva Systems Is Reasonably Priced:
Compared to the Healthcare sector's average of 13.21, Veeva Systems has a trailing twelve month P/E ratio of 64.7 and, according to its EPS guidance of 4.48, an expected P/E ratio of 37.6. Veeva Systems's PEG ratio is 1.93 based on its 33.5% annual average growth rate of historical and projected earnings per share. However, we believe that it is more prudent to calculate the PEG ratio using the broader market's 5-year expected EPS growth rate of 13.05%, because the growth rate implied by Veeva Systems's past and expected EPS is probably not sustainable. This more prudent approach shows a PEG ratio of 4.96, which suggests that the company's shares are actually overvalued.
Veeva Systems's P/B ratio is 7.7 compared to its sector average of 4.07. The company is likely overvalued in terms of its net asset value. The company's shares are currently trading 423.7% above their fair value as expressed by Benjamin Graham's formula:
√(22.5 * 4-year average EPS * book value per share) = √(22.5 * 2.09 * 21.967) = $32.14
Veeva Systems's strong cash flow trend and reasonable levels of debt attenuate the company's lofty valuation in terms of earnings and assets.
Veeva Systems Is the Subject of Mixed Market Indicators:
26 analysts are following Veeva Systems and have set target prices ranging from $180 to $243 per share. On average, they have given the company a rating of buy. At the current price of $168.33, VEEV is trading -19.87% away from its average analyst target price of $210.07 per share, implying an analyst consensus of some upside potential for the stock.
The company has a very low short interest since 1.9% of the company's shares are tied to short positions. Institutions own 93.9% of Veeva Systems's shares, while the insider ownership rate stands at 0.74%. The biggest shareholder is Price (T.Rowe) Associates Inc with a 9% stake in the company worth approximately $2,246,752,548.
