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Enghouse Systems (TSE:ENGH)
TSX:ENGH

Enghouse Systems (ENGH) AI Stock Analysis

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Enghouse Systems

(TSX:ENGH)

Rating:68Neutral
Price Target:
C$26.00
▲(14.59%Upside)
Enghouse Systems demonstrates strong financial health and strategic growth initiatives. However, technical indicators suggest near-term bearish sentiment. The company's fair valuation and attractive dividend yield provide a solid investment proposition, balanced by ongoing market challenges.

Enghouse Systems (ENGH) vs. iShares MSCI Canada ETF (EWC)

Enghouse Systems Business Overview & Revenue Model

Company DescriptionEnghouse Systems Limited is a Canadian-based software and services company that operates globally in the sectors of telecommunications, contact centers, and transportation. The company specializes in providing enterprise software solutions that enhance customer service, improve operational efficiencies, and enable increased productivity. Enghouse offers a diverse range of products including contact center management software, video collaboration solutions, and transit management systems, catering to both private and public sector clients.
How the Company Makes MoneyEnghouse Systems generates revenue through the sale of software licenses, recurring subscription fees, and professional services. Key revenue streams include its contact center and video collaboration solutions, which are utilized by businesses to manage customer interactions and facilitate remote communication. The company also earns from its transportation solutions, which are used by transit operators for scheduling, dispatch, and passenger information systems. Enghouse's strategic acquisitions of complementary technology companies further bolster its product offerings and market reach, contributing to sustained revenue growth. Additionally, the company benefits from long-term customer contracts and partnerships with telecommunications and service providers, enhancing its recurring revenue base.

Enghouse Systems Earnings Call Summary

Earnings Call Date:Jun 05, 2025
(Q2-2025)
|
% Change Since: -13.73%|
Next Earnings Date:Sep 04, 2025
Earnings Call Sentiment Neutral
While Enghouse is expanding its recurring revenue and maintaining a strong cash position, declines in revenue, EBITDA, and net income, coupled with market volatility and operational challenges, paint a mixed picture.
Q2-2025 Updates
Positive Updates
Increase in Recurring Revenue
Recurring revenue increased to $86.2 million, representing 69.1% of total revenue, up from 67.5% last year, emphasizing the strategic focus on predictable long-term revenue streams.
Strong Cash Position and No Debt
Ended the quarter with $263.5 million in cash, cash equivalents, and short-term investments, with no external debt.
Successful Acquisitions and Integration
Completed the acquisition and integration of Margento and Trafi, enhancing the transportation portfolio and aligning with the broader mobility strategy.
Dividend Announcement
Board approved a quarterly dividend of $0.30 per common share, payable on August 29, 2025.
Negative Updates
Decline in Revenue and EBITDA
Revenue for the quarter was $124.8 million, a decline of 0.8% year-over-year. Adjusted EBITDA was $28.6 million with a margin of 22.9%, down from $35.7 million and a 28.4% margin in Q2 2024.
Decrease in Net Income
Net income for the quarter was $13.5 million or $0.24 per diluted share, compared to $20 million or $0.36 per diluted share last year.
Operational Challenges
Increased operating costs due to the shift towards SaaS revenue, overlap of costs related to recent acquisitions, and special charges of $1.4 million.
Demand Hesitancy and Market Volatility
Global economic volatility, demand-side hesitancy, and delays in capital investment decisions impacted performance.
Company Guidance
During Enghouse's Q2 2025 conference call, the company reported a revenue of $124.8 million, reflecting a year-over-year decline of 0.8%, and an adjusted EBITDA of $28.6 million with a margin of 22.9%, down from 28.4% in Q2 2024. Recurring revenue increased to $86.2 million, accounting for 69.1% of total revenue, up from 67.5% the previous year. Despite facing challenges such as foreign exchange volatility and increased operating costs, including special charges of $1.4 million, Enghouse maintained a strong cash position with $263.5 million in cash, cash equivalents, and short-term investments, and operated without external debt. The company invested $26.8 million in acquisitions and returned $14.3 million to shareholders through dividends. Moving forward, Enghouse aims to leverage its financial strength to continue strategic acquisitions and maintain a focus on operational efficiency and recurring revenue growth despite a difficult macroeconomic environment.

Enghouse Systems Financial Statement Overview

Summary
Enghouse Systems exhibits strong financial health with solid profitability margins, a robust balance sheet, and efficient cash flow generation. Despite modest revenue growth, the company maintains a conservative leverage position and strong equity.
Income Statement
78
Positive
Enghouse Systems shows strong profitability with a gross profit margin of 62.1% and a net profit margin of 16.8% in the TTM (Trailing-Twelve-Months). The company has maintained stable EBIT and EBITDA margins of 22.3% and 29.8% respectively. Although revenue growth is modest at 0.7%, the company has demonstrated consistent profitability over the years.
Balance Sheet
83
Very Positive
The balance sheet of Enghouse Systems is solid, with a low debt-to-equity ratio of 0.019, indicating minimal leverage. Return on equity stands at a healthy 14.0%, and the equity ratio is robust at 70.2%, showcasing financial stability and a strong equity base.
Cash Flow
81
Very Positive
Enghouse Systems exhibits a strong cash flow position, with a slight growth in free cash flow by 1.0%. The operating cash flow to net income ratio is 1.57, highlighting efficient cash generation relative to net income. The free cash flow to net income ratio stands at 1.54, reflecting strong cash flow conversion.
Breakdown
TTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
506.02M502.50M454.02M427.58M467.18M503.78M
Gross Profit
314.28M326.92M304.02M297.49M337.55M358.60M
EBIT
112.74M133.85M122.11M95.42M111.40M124.90M
EBITDA
150.83M150.66M136.90M143.79M163.33M180.67M
Net Income Common Stockholders
85.10M81.33M72.25M94.50M92.79M98.59M
Balance SheetCash, Cash Equivalents and Short-Term Investments
271.09M274.73M240.36M228.05M198.83M251.79M
Total Assets
865.39M833.49M783.67M705.00M674.62M763.65M
Total Debt
11.50M11.09M12.40M19.88M25.60M42.16M
Net Debt
-258.81M-263.15M-227.13M-205.23M-170.29M-202.64M
Total Liabilities
258.29M237.69M228.34M196.83M220.31M267.32M
Stockholders Equity
607.10M595.81M555.33M508.17M454.31M496.32M
Cash FlowFree Cash Flow
131.40M130.09M114.24M102.26M115.13M165.60M
Operating Cash Flow
133.42M132.07M115.30M103.18M118.46M168.15M
Investing Cash Flow
-52.05M-45.25M-57.23M-21.09M-37.62M-45.07M
Financing Cash Flow
-69.35M-57.08M-51.78M-54.87M-119.51M-22.32M

Enghouse Systems Technical Analysis

Technical Analysis Sentiment
Negative
Last Price22.69
Price Trends
50DMA
24.95
Negative
100DMA
25.56
Negative
200DMA
27.33
Negative
Market Momentum
MACD
-0.86
Positive
RSI
24.93
Positive
STOCH
2.03
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:ENGH, the sentiment is Negative. The current price of 22.69 is below the 20-day moving average (MA) of 24.93, below the 50-day MA of 24.95, and below the 200-day MA of 27.33, indicating a bearish trend. The MACD of -0.86 indicates Positive momentum. The RSI at 24.93 is Positive, neither overbought nor oversold. The STOCH value of 2.03 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:ENGH.

Enghouse Systems Peers Comparison

Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
TSKXS
74
Outperform
C$5.67B407.682.32%15.14%-31.45%
74
Outperform
$10.03B11.4015.87%3.72%-8.74%307.82%
71
Outperform
$1.09B34.4841.12%20.52%246.69%
TSTCS
71
Outperform
C$595.52M197.154.56%0.85%2.61%46.26%
68
Neutral
$1.25B15.9213.26%5.30%5.12%-2.77%
63
Neutral
C$2.12B-33.64%23.95%39.68%
62
Neutral
$11.92B10.03-7.37%3.70%7.32%-8.25%
* Technology Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
TSE:ENGH
Enghouse Systems
22.69
-5.87
-20.56%
TSE:OTEX
Open Text
38.84
0.43
1.13%
TSE:DCBO
Docebo
36.36
-13.97
-27.76%
TSE:KXS
Kinaxis Inc
201.25
52.54
35.33%
TSE:LSPD
Lightspeed POS Inc
15.35
-2.89
-15.84%
TSE:TCS
TECSYS Inc. J
41.19
8.18
24.78%

Enghouse Systems Corporate Events

M&A TransactionsDividendsBusiness Operations and StrategyFinancial Disclosures
Enghouse Systems Reports Q2 2025 Results Amid Strategic Acquisitions
Neutral
Jun 6, 2025

Enghouse Systems Limited reported a slight decrease in revenue for the second quarter of 2025, with a 0.8% drop compared to the same period last year. Despite the decline, the company continues to prioritize recurring revenue and maintain a strong cash position, which supports its acquisition strategy. The recent acquisitions of Margento and Trafi are expected to bolster Enghouse’s transportation offerings and align with its long-term growth vision. The company remains financially resilient with no external debt and continues to pay dividends, reflecting its commitment to shareholder returns.

The most recent analyst rating on (TSE:ENGH) stock is a Buy with a C$43.00 price target. To see the full list of analyst forecasts on Enghouse Systems stock, see the TSE:ENGH Stock Forecast page.

Product-Related AnnouncementsBusiness Operations and Strategy
Enghouse and NKS110 IKS Enhance Norway’s Emergency Response System
Positive
May 6, 2025

Enghouse Transportation & Public Safety, in collaboration with NKS110 IKS, has successfully implemented the Enghouse LocusEmergency OHV (LEO) system across all 110 emergency dispatch centers in Norway. This deployment enhances public safety by providing advanced resource management tools that improve situational awareness and response times. The initiative strengthens Norway’s emergency infrastructure, ensuring readiness for current and future challenges, and reflects Enghouse’s commitment to delivering cutting-edge technology for public safety organizations.

M&A TransactionsBusiness Operations and Strategy
Enghouse Systems Acquires Trafi to Boost Mobility-as-a-Service Offerings
Positive
Apr 14, 2025

Enghouse Systems Limited has acquired Trafi Ltd., a leading provider of Mobility-as-a-Service (MaaS) solutions, to enhance its transportation mobility solutions portfolio. This acquisition allows Enghouse to integrate Trafi’s scalable MaaS platform, which unifies various transport modes into a seamless user experience, thereby expanding its reach and capabilities in the transit market. The move is expected to accelerate the delivery of integrated mobility experiences globally, benefiting cities and public transport authorities by offering advanced features like real-time data mapping and in-app ticketing.

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.