SS&C is a business we have written-up before, we would call it a high quality compounder that occasionally gets very cheap, we think now is one of those times.
Trades at 11x EPS, yet has grown EPS at a 25% CAGR for the last decade.
With highly predictable and defensive earnings, SSNC is relatively well positioned into an economic downturn.
SSNC’s earnings growth is driven by acquisitions.
They are excellent operators of mature businesses. Corporate EBITDA margins drop after an acquisition, then rapidly return to the 40% level.
We think it is an opportune time with more targets likely available and at better prices than they have been for a long time.
What might put you off? The debt, 75% of which is floating rate and thus a drag on EPS growth.
Potential Upside: $85 (+50%) Sensible Downside: $49 (-12%)
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