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Amdocs (DOX)
NASDAQ:DOX
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Amdocs
(NASDAQ:DOX)
Rating:77Outperform
Price Target:
$103.00
▲(11.52%Upside)
Positive Factors
Cloud Growth
Cloud initiatives continue to generate most of the growth, with cloud accounting for over 25% of revenues and growing at a double-digit rate.
Financial Performance
Operating margin of 21.2% increased by 310 basis points year-over-year, driven by the phasing out of non-core businesses and operating efficiencies.
Revenue Visibility
Backlog increased by $80 million quarter-over-quarter and 3.5% year-over-year on a pro forma constant currency basis, providing nearly 90% visibility for next year's revenues.
Negative Factors
Industry Challenges
The company noted continued industry spending challenges, contributing to a challenging core underlying growth.
Macro Environment
There has been no significant shift in the sluggish business trends, and the company is still experiencing an unfavorable macro environment.
Revenue Headwind
The business will face lower growth and a $600 million revenue headwind due to the discontinuation of low-margin businesses.
Amdocs (DOX) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$10.27B
Dividend Yield2.28%
Average Volume (3M)578.07K
Price to Earnings (P/E)19.3
Beta (1Y)0.53
Revenue Growth-4.37%
EPS Growth7.18%
CountryUS
Employees29,058
SectorTechnology
Sector Strength82
IndustrySoftware - Infrastructure
Share Statistics
EPS (TTM)1.78
Shares Outstanding111,219,000
10 Day Avg. Volume661,301
30 Day Avg. Volume578,072
Financial Highlights & Ratios
PEG Ratio-1.05
Price to Book (P/B)2.73
Price to Sales (P/S)0.00
P/FCF Ratio18.16
Enterprise Value/Market Cap0.96
Enterprise Value/Revenue0.50
Enterprise Value/Gross Profit5.73
Enterprise Value/Ebitda2.97
Forecast
1Y Price Target
$102.33Price Target Upside10.79% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering3
Amdocs Business Overview & Revenue Model
Company DescriptionAmdocs Limited, a leading multinational corporation, specializes in software and services for communications, media, and financial services providers. Headquartered in Chesterfield, Missouri, the company offers a wide range of solutions, including customer experience systems, operational support systems, network and service management, and digital services. Amdocs empowers its clients to streamline operations, improve customer engagement, and drive innovation through its comprehensive suite of products and services.
How the Company Makes MoneyAmdocs generates revenue primarily through the sale of software and services to communications and media companies. The company earns money from licensing its software solutions, providing managed services, and offering support and maintenance. Additionally, Amdocs capitalizes on long-term contracts and strategic partnerships with key industry players, which often include multi-year service agreements. These partnerships and contracts ensure a steady flow of income, enabling Amdocs to maintain a robust financial performance. The company's revenue streams are further diversified by its expansion into digital and cloud-based services, which cater to the evolving needs of its clients.
Amdocs Earnings Call Summary
Earnings Call Date:May 07, 2025
(Q2-2025)
| % Change Since: 3.38%|
Next Earnings Date:Aug 06, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong financial performance, with revenue and profitability exceeding expectations. Amdocs demonstrated robust growth in managed services and cloud initiatives, and made significant advancements in AI and GenAI capabilities. However, challenges such as foreign currency impacts and mixed trends in certain regions were noted, amidst a backdrop of increasing macroeconomic uncertainty.Q2-2025 Updates
Positive Updates
Revenue Growth Above Guidance
Revenue of $1.13 billion was above the midpoint of guidance and increased by 4% from a year ago in pro forma constant currency.
Improved Profitability
Profitability improved by 10 basis points sequentially, reflecting ongoing internal efficiency gains.
Strong Free Cash Flow
Generated robust free cash flow of $181 million, excluding restructuring-related payments, supported by healthy customer cash collection.
12-Month Backlog Increase
Closed the second quarter with a 12-month backlog of $4.17 billion, up by 3.5% pro forma from a year ago.
Managed Services Record
Delivered another record quarter in managed services, which contributed roughly two-thirds of total revenue.
Cloud and AI Initiatives
Continued strong sales momentum in cloud and announced major cloud projects with Microsoft and other leading operators.
AI and GenAI Advancements
Amdocs' amAIz platform and collaboration with NVIDIA highlighted as significant advancements, with multiple PoCs in advanced stages.
Share Repurchase Authorization
Board authorized a new share repurchase plan of $1 billion, with $1.26 billion of remaining repurchase authority as of March 31.
Negative Updates
Foreign Currency Impact
Revenue was impacted by a negative foreign currency movement of approximately $2 million compared to guidance assumptions.
Mixed Trends in Latin America
Despite healthy customer activity in Southeast Asia, mixed trends in Latin America resulted in a sequential decline in rest of the world.
Macroeconomic Uncertainty
Level of global macroeconomic uncertainty is rising, but Amdocs believes it is relatively well-positioned to navigate the current environment.
Company Guidance
During the Amdocs Second Quarter 2025 Earnings Conference Call, the company provided guidance reflecting positive performance and strategic growth. Amdocs reported revenue of $1.13 billion, a 4% year-over-year increase in pro forma constant currency, and a 10 basis point sequential improvement in profitability. The call highlighted a robust free cash flow of $181 million, excluding restructuring payments, and non-GAAP earnings per share of $1.78, surpassing the guidance range. The 12-month backlog increased by 3.5% pro forma to $4.17 billion. Amdocs remains on track to achieve double-digit growth in cloud-related revenue and reiterated its fiscal 2025 revenue growth outlook of 2.7% at the midpoint. The company emphasized ongoing strategic initiatives, including cloud migration projects, AI developments, and digital transformation efforts. Amdocs also announced a new $1 billion share repurchase plan and expects to return the majority of free cash flow to shareholders, projecting free cash flow between $710 million and $730 million for the fiscal year.Amdocs Financial Statement Overview
Summary
Amdocs exhibits solid financial health with stable profitability and effective cash flow management. While revenue growth has been underwhelming, cost controls and leverage are well-maintained. The company is in a strong equity position, with manageable debt levels. Future focus could be on enhancing revenue growth and optimizing asset and cash flow management to sustain long-term competitiveness.Income Statement
Amdocs' income statement shows a stable performance with a decent gross profit margin and consistent EBIT and EBITDA margins. The TTM data reveals a slight decline in total revenue compared to the previous period, indicating a potential stagnation in revenue growth. However, the company maintains a healthy net profit margin, reflecting efficient cost management. The overall income statement suggests moderate profitability with room for revenue growth improvement.72
Positive
Balance Sheet
The balance sheet reflects a strong equity position with a good equity ratio, indicating financial stability. The debt-to-equity ratio is reasonable, suggesting manageable leverage levels. However, the ROE has shown some variability, indicating fluctuating returns to shareholders. Overall, the balance sheet is robust, but optimizing asset utilization could enhance performance.68
Positive
Cash Flow
Amdocs demonstrates strong cash flow management, with a healthy operating cash flow to net income ratio, indicating efficient operational performance. The free cash flow remains positive, albeit with a slight decrease in growth rate, which could impact future investment capabilities. However, the company appears to effectively manage its cash flows, maintaining flexibility for strategic initiatives.75
Positive
| Breakdown | |||||
| TTM | Sep 2024 | Sep 2023 | Sep 2022 | Sep 2021 | Sep 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 4.75B | 5.00B | 4.89B | 4.58B | 4.29B | 4.17B | Gross Profit |
| 1.72B | 1.76B | 1.73B | 1.62B | 1.48B | 1.41B | EBIT |
| 700.41M | 628.61M | 653.99M | 664.80M | 372.28M | 594.76M | EBITDA |
| 822.63M | 819.03M | 855.15M | 889.85M | 1.04B | 792.16M | Net Income Common Stockholders |
| 541.11M | 493.20M | 540.71M | 549.50M | 688.37M | 497.84M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 323.75M | 514.33M | 742.53M | 817.98M | 965.59M | 983.94M | Total Assets |
| 6.20B | 6.39B | 6.43B | 6.39B | 6.51B | 6.34B | Total Debt |
| 787.74M | 789.74M | 807.31M | 826.83M | 881.17M | 1.03B | Net Debt |
| 540.35M | 443.65M | 287.23M | 253.45M | 172.11M | 50.01M | Total Liabilities |
| 2.70B | 2.89B | 2.86B | 2.83B | 2.88B | 2.68B | Stockholders Equity |
| 3.46B | 3.46B | 3.52B | 3.52B | 3.59B | 3.62B |
| Cash Flow | Free Cash Flow | ||||
| 601.93M | 618.93M | 698.27M | 529.50M | 715.37M | 452.63M | Operating Cash Flow |
| 687.40M | 724.43M | 822.63M | 756.72M | 925.81M | 658.14M | Investing Cash Flow |
| 10.59M | -127.41M | -224.50M | -262.50M | -329.00M | -461.73M | Financing Cash Flow |
| -793.51M | -771.02M | -651.43M | -629.90M | -870.93M | 315.14M |
Amdocs Technical Analysis
Positive
92.36
Price Trends
89.32
Positive
88.51
Positive
87.23
Positive
Market Momentum
0.82
Positive
53.42
Neutral
57.66
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DOX, the sentiment is Positive. The current price of 92.36 is above the 20-day moving average (MA) of 92.22, above the 50-day MA of 89.32, and above the 200-day MA of 87.23, indicating a bullish trend. The MACD of 0.82 indicates Positive momentum. The RSI at 53.42 is Neutral, neither overbought nor oversold. The STOCH value of 57.66 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for DOX.
Amdocs Risk Analysis
Amdocs disclosed 29 risk factors in its most recent earnings report. Amdocs reported the most risks in the "Tech & Innovation" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Amdocs Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $10.27B | 19.33 | 15.45% | 2.28% | -4.37% | 7.18% | |
76 Outperform | $11.51B | 26.55 | 9.82% | ― | 3.51% | -27.28% | |
69 Neutral | $7.97B | 18.61 | -60.11% | ― | 0.79% | 0.59% | |
65 Neutral | $9.49B | ― | -4.73% | ― | 33.95% | 87.03% | |
62 Neutral | $11.95B | 9.93 | -7.21% | 4.85% | 7.32% | -8.25% | |
54 Neutral | $16.87B | ― | 218.28% | ― | 43.89% | 49.74% | |
46 Neutral | $12.77B | ― | -11.15% | ― | 23.16% | -9.81% |
* Technology Sector Average
Performance Comparison
DOX
Amdocs
92.36
15.67
20.43%
AKAM
Akamai
78.70
-10.22
-11.49%
DBX
Dropbox
28.32
6.19
27.97%
KVYO
Klaviyo, Inc. Class A
33.83
11.49
51.43%
RBRK
Rubrik, Inc. Class A
87.17
58.52
204.26%
SAIL
SailPoint, Inc.
22.95
-1.60
-6.52%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.