SPS Commerce, Inc.
SPS Commerce, Inc. Fundamental Analysis
SPS Commerce, Inc. (SPSC) shows moderate financial fundamentals with a PE ratio of 23.38, profit margin of 12.42%, and ROE of 9.82%. The company generates $0.8B in annual revenue with strong year-over-year growth of 18.78%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 72.6/100 based on profitability, valuation, growth, and balance sheet metrics. The B grade reflects solid fundamentals with room for improvement in valuation or growth.
Fundamental Health Score
We analyze SPSC's fundamental strength across five key dimensions:
Efficiency Score
WeakSPSC struggles to generate sufficient returns from assets.
Valuation Score
ModerateSPSC shows balanced valuation metrics.
Growth Score
ExcellentSPSC delivers strong and consistent growth momentum.
Financial Health Score
ExcellentSPSC maintains a strong and stable balance sheet.
Profitability Score
WeakSPSC struggles to sustain strong margins.
Key Financial Metrics
Is SPSC Expensive or Cheap?
P/E Ratio
SPSC trades at 23.38 times earnings. This indicates a fair valuation.
PEG Ratio
When adjusting for growth, SPSC's PEG of 2.38 indicates potential overvaluation.
Price to Book
The market values SPS Commerce, Inc. at 2.24 times its book value. This may indicate undervaluation.
EV/EBITDA
Enterprise value stands at 13.13 times EBITDA. This signals the market has high growth expectations.
How Well Does SPSC Make Money?
Net Profit Margin
For every $100 in sales, SPS Commerce, Inc. keeps $12.42 as profit after all expenses.
Operating Margin
Core operations generate 15.74 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $9.82 in profit for every $100 of shareholder equity.
ROA
SPS Commerce, Inc. generates $7.98 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
SPS Commerce, Inc. produces operating cash flow of $179.72M, showing steady but balanced cash generation.
Free Cash Flow
SPS Commerce, Inc. generates strong free cash flow of $153.06M, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $4.04 in free cash annually.
FCF Yield
SPSC converts 6.94% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
23.38
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
2.38
vs 25 benchmark
P/B Ratio
Price to book value ratio
2.24
vs 25 benchmark
P/S Ratio
Price to sales ratio
2.92
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
0.01
vs 25 benchmark
Current Ratio
Current assets to current liabilities
1.74
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.10
vs 25 benchmark
ROA
Return on assets percentage
0.08
vs 25 benchmark
ROCE
Return on capital employed
0.12
vs 25 benchmark
How SPSC Stacks Against Its Sector Peers
| Metric | SPSC Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 23.38 | 35.19 | Better (Cheaper) |
| ROE | 9.82% | 1155.00% | Weak |
| Net Margin | 12.42% | -127067.00% (disorted) | Strong |
| Debt/Equity | 0.01 | 0.41 | Strong (Low Leverage) |
| Current Ratio | 1.74 | 4.71 | Neutral |
| ROA | 7.98% | -314918.00% (disorted) | Weak |
SPSC outperforms its industry in 3 out of 6 key metrics, particularly excelling in Net Margin, but lagging in ROE.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews SPS Commerce, Inc.'s 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
114.51%
Industry Style: Growth, Innovation, High Beta
High GrowthEPS CAGR
114.58%
Industry Style: Growth, Innovation, High Beta
High GrowthFCF CAGR
105.82%
Industry Style: Growth, Innovation, High Beta
High Growth