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ATOSS Software AG (ETR:AOF), is a €313.4m small-cap, which operates in the IT services industry based in Germany. The sector has significantly been impacted by technology megatrends, which have changed how industrial and consumer-oriented companies operate. However, more specifically in the IT service industry, tech analysts are forecasting a positive double-digit growth of 16.5% in the upcoming year , and an enormous growth of 74.5% over the next couple of years. This rate is larger than the growth rate of the DE stock market as a whole. Below, I will examine the sector growth prospects, and also determine whether ATOSS Software is a laggard or leader relative to its tech sector peers.
Check out our latest analysis for ATOSS Software
What’s the catalyst for ATOSS Software’s sector growth?
Since the regulatory environment is unlikely to become less complex, organizations will need to address the constantly evolving rules for governing data. Over the past year, the industry saw growth in the teens, though still underperforming the wider DE stock market. ATOSS Software lags the pack with its lower growth rate of 8.0% over the past year, which indicates the company has been growing at a slower pace than its IT services peers. However, in the upcoming year, ATOSS Software is expected to deliver growth in-line with its industry peers, at a growth rate of 16.5%.
Is ATOSS Software and the sector relatively cheap?
The IT services sector’s PE is currently hovering around 25.05x, relatively similar to the rest of the DE stock market PE of 20.37x. This illustrates a fairly valued sector relative to the rest of the market, indicating low mispricing opportunities. However, the industry returned a higher 18.7% compared to the market’s 12.2%, potentially illustrative of past tailwinds. On the stock-level, ATOSS Software is trading at a higher PE ratio of 31.49x, making it more expensive than the average IT services stock. In terms of returns, ATOSS Software generated 44.9% in the past year, which is 26.2% over the IT services sector.
Next Steps:
ATOSS Software’s future growth prospect aligns with that of the broader market, however its relative value seems to be above the rest of the industry. This could indicate the price is reflective of factors other than growth. If ATOSS Software has been on your watchlist for a while, now may not be the best time to enter into the stock since it is trading at a higher valuation compared to other tech companies. If you’re looking for growth, it seems other industry peers are also delivering the same rate. However, before you make a decision on the stock, I suggest you look at ATOSS Software’s fundamentals in order to build a holistic investment thesis.