Manhattan Associates (MANH) Analysis
Chart done on daily timeframe. The leap for demand in supply chain management following the pandemic benefited companies like Manhattan Associates significantly, helping them grow their revenue by nearly 50% in the last three years alone. Having been in the game since the early 90s, MANH placed itself in a growing business and has slowly grown itself to be a a competitor in the industry. Their software solutions help manage supply chains, inventory, operations…etc. and they operate across the globe, giving them an edge over local companies. Their persistence over the years paid off, bringing them closer to breaking 1B in annual revenue, which they’re projected to do so this year. Being a software company, they’ve been able to constantly post positive net income, but their profit margins are a bit low, making their price to earnings ratio a bit expensive at its current 69x reading. Their market cap of 15B is also a bit overpriced for the time being, roughly by about 30-50%.
With that considered, there are a number of ways this company could become more attractive. Either they continue growing their revenue, investors will want to see annual revenue at about 1.5B to justify the 15B valuation, or they need to increase their profit margins and grow their free cash flow. The company’s track record indicates that this is very much doable for them, and as demand for supply chain software continues to ramp up, they should achieve it.
In the short term however, it is difficult to buy this company at its current levels and valuations, at least not for a full position. Even if they do push higher, that will only drive their market cap into further inflated numbers. Their strong record does make them attractive, but it is certainly a name to ease into and continue watching earnings closely to see their ability to grow their revenue by another 50%.
Technical analysis:
If we ignore the fundamentals and strictly look at the technicals, the stock is bullish and could be looking for a move to a new all time high soon. Buyers need a move a move above 255.00 to begin reaching for 265.00-267.00. Critical support is 238.00 (post earnings gap up lows).