Investment Thesis
SS&C demonstrates solid operational fundamentals with strong free cash flow generation (17.8% FCF margin) and healthy profitability margins (24.2% operating margin), but is constrained by elevated leverage (1.07x Debt/Equity, $7.3B debt) and poor returns on equity (3.3% ROE). The 6.6% revenue growth coupled with slower net income growth (4.9%) signals margin compression that, combined with tight liquidity (1.10x current ratio), warrants a cautious stance.
Strengths
- Exceptional free cash flow generation ($293.7M) with 17.8% FCF margin, indicating high-quality earnings
- Strong profitability metrics: 48.7% gross margin and 24.2% operating margin typical of quality software businesses
- Asset-light business model with minimal CapEx ($6.0M), demonstrating capital efficiency
- Solid revenue growth of 6.6% YoY with $1.6B revenue base showing scale and market position
Risks
- Elevated leverage with $7.3B long-term debt and 1.07x Debt/Equity ratio limiting financial flexibility
- Deteriorating profitability trend: net income growth (4.9%) trails revenue growth (6.6%), indicating margin compression
- Critically low returns on equity (3.3%) and assets (1.1%), signaling minimal shareholder value creation relative to capital base
- Tight liquidity position (1.10x current ratio) with limited buffer for operational disruptions
Key Metrics to Watch
- Net margin trajectory and operating expense ratio trends to assess if margin compression stabilizes
- Free cash flow sustainability and debt reduction progress to improve leverage profile
- Return on equity trends as proxy for shareholder value creation and capital allocation efficiency
Financial Metrics
Revenue
1.6B
Net Income
226.1M
EPS (Diluted)
$0.91
Free Cash Flow
293.7M
Total Assets
20.3B
Cash
420.9M
Profitability Ratios
Gross Margin
48.7%
Operating Margin
24.2%
Net Margin
13.7%
ROE
3.3%
ROA
1.1%
FCF Margin
17.8%
Balance Sheet & Liquidity
Current Ratio
1.10x
Quick Ratio
1.10x
Debt/Equity
1.07x
Debt/Assets
66.1%
Interest Coverage
3.78x
Long-term Debt
7.3B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-06T12:00:26.744127 |
Data as of: 2026-03-31 |
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