We assign a fundamental rating of 4 out of 10 to DAVA. DAVA was compared to 88 industry peers in the IT Services industry. While DAVA seems to be doing ok healthwise, there are quite some concerns on its profitability. DAVA is valued quite cheap, while showing a decent growth score. This is a good combination!

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1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

DAVA had positive earnings in the past year.
In the past year DAVA had a positive cash flow from operations.
Each year in the past 5 years DAVA has been profitable.
Each year in the past 5 years DAVA had a positive operating cash flow.

1.2 Ratios

With a Return On Assets value of 1.16%, DAVA perfoms like the industry average, outperforming 50.00% of the companies in the same industry.
DAVA has a Return On Equity (1.90%) which is comparable to the rest of the industry.
With a Return On Invested Capital value of 2.23%, DAVA perfoms like the industry average, outperforming 53.41% of the companies in the same industry.
Measured over the past 3 years, the Average Return On Invested Capital for DAVA is significantly below the industry average of 29.06%.

		Industry Rank	Sector Rank
ROA	1.16%
ROE	1.9%
ROIC	2.23%

ROA(3y)5.4%

ROA(5y)7.77%

ROE(3y)7.6%

ROE(5y)11.34%

ROIC(3y)5.99%

ROIC(5y)9.17%

1.3 Margins

Looking at the Profit Margin, with a value of 1.43%, DAVA is in line with its industry, outperforming 50.00% of the companies in the same industry.
In the last couple of years the Profit Margin of DAVA has declined.
DAVA has a Operating Margin of 3.16%. This is comparable to the rest of the industry: DAVA outperforms 47.73% of its industry peers.
In the last couple of years the Operating Margin of DAVA has declined.
DAVA's Gross Margin of 24.19% is on the low side compared to the rest of the industry. DAVA is outperformed by 72.73% of its industry peers.
DAVA's Gross Margin has declined in the last couple of years.

		Industry Rank	Sector Rank
OM	3.16%
PM (TTM)	1.43%
GM	24.19%

OM growth 3Y-34.74%

OM growth 5Y-9.2%

PM growth 3Y-39.96%

PM growth 5Y-13.58%

GM growth 3Y-8.99%

GM growth 5Y-2.39%

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), DAVA is destroying value.
The number of shares outstanding for DAVA has been reduced compared to 1 year ago.
Compared to 5 years ago, DAVA has more shares outstanding
Compared to 1 year ago, DAVA has a worse debt to assets ratio.

2.2 Solvency

An Altman-Z score of 2.34 indicates that DAVA is not a great score, but indicates only limited risk for bankruptcy at the moment.
DAVA's Altman-Z score of 2.34 is in line compared to the rest of the industry. DAVA outperforms 45.45% of its industry peers.
The Debt to FCF ratio of DAVA is 4.49, which is a neutral value as it means it would take DAVA, 4.49 years of fcf income to pay off all of its debts.
Looking at the Debt to FCF ratio, with a value of 4.49, DAVA is in line with its industry, outperforming 54.55% of the companies in the same industry.
DAVA has a Debt/Equity ratio of 0.40. This is a healthy value indicating a solid balance between debt and equity.
DAVA's Debt to Equity ratio of 0.40 is in line compared to the rest of the industry. DAVA outperforms 48.86% of its industry peers.

		Industry Rank	Sector Rank
Debt/Equity	0.4
Debt/FCF	4.49
Altman-Z	2.34

ROIC/WACC0.2

WACC11.34%

2.3 Liquidity

A Current Ratio of 2.18 indicates that DAVA has no problem at all paying its short term obligations.
The Current ratio of DAVA (2.18) is better than 62.50% of its industry peers.
DAVA has a Quick Ratio of 2.18. This indicates that DAVA is financially healthy and has no problem in meeting its short term obligations.
With a decent Quick ratio value of 2.18, DAVA is doing good in the industry, outperforming 64.77% of the companies in the same industry.

		Industry Rank	Sector Rank
Current Ratio	2.18
Quick Ratio	2.18

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WACC

Debt/Equity

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Altman-Z score

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3. Growth

3.1 Past

The Earnings Per Share has been growing slightly by 3.59% over the past year.
Measured over the past 5 years, DAVA shows a small growth in Earnings Per Share. The EPS has been growing by 2.54% on average per year.
Looking at the last year, DAVA shows a small growth in Revenue. The Revenue has grown by 1.07% in the last year.
The Revenue has been growing by 17.08% on average over the past years. This is quite good.

EPS 1Y (TTM)3.59%

EPS 3Y-16.39%

EPS 5Y2.54%

EPS Q2Q%-40.94%

Revenue 1Y (TTM)1.07%

Revenue growth 3Y5.65%

Revenue growth 5Y17.08%

Sales Q2Q%-8.65%

3.2 Future

DAVA is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 3.51% yearly.
Based on estimates for the next years, DAVA will show a small growth in Revenue. The Revenue will grow by 1.29% on average per year.

EPS Next Y-29.14%

EPS Next 2Y-6.84%

EPS Next 3Y1.91%

EPS Next 5Y3.51%

Revenue Next Year-4.47%

Revenue Next 2Y-0.35%

Revenue Next 3Y1.22%

Revenue Next 5Y1.29%

3.3 Evolution

When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.
The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.

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4. Valuation

4.1 Price/Earnings Ratio

A Price/Earnings ratio of 4.96 indicates a rather cheap valuation of DAVA.
Compared to the rest of the industry, the Price/Earnings ratio of DAVA indicates a rather cheap valuation: DAVA is cheaper than 94.32% of the companies listed in the same industry.
DAVA's Price/Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 27.32.
Based on the Price/Forward Earnings ratio of 5.18, the valuation of DAVA can be described as very cheap.
Compared to the rest of the industry, the Price/Forward Earnings ratio of DAVA indicates a rather cheap valuation: DAVA is cheaper than 95.45% of the companies listed in the same industry.
Compared to an average S&P500 Price/Forward Earnings ratio of 24.32, DAVA is valued rather cheaply.

		Industry Rank	Sector Rank
PE	4.96
Fwd PE	5.18

4.2 Price Multiples

DAVA's Enterprise Value to EBITDA ratio is rather cheap when compared to the industry. DAVA is cheaper than 89.77% of the companies in the same industry.
DAVA's Price/Free Cash Flow ratio is rather cheap when compared to the industry. DAVA is cheaper than 96.59% of the companies in the same industry.