The WiseTech Global Ltd (ASX: WTC) share price has been on yet another tear, up nearly 25% over the past month and almost 80% since Christmas. WiseTech is the 'W' in the trendiest club on the ASX – WAAAX. Although the WAAAX acronym conjures images of high-flying tech start-ups, WiseTech has actually been around since grunge and Kurt Cobain (1994 to be exact).
What do WiseTech do?
WiseTech specialises in providing an end-to-end, cloud-based software solutions for the logistics industry, both locally and globally.
The company has grown to a truly global scale, with over 40 offices across Australia, Asia, Europe and the Americas. WiseTech boasts that its flagship product – CargoWise One "forms an integral link in the global supply chain" and with good reason: more than 12,000 logistics organisations use WiseTech's software across 130 countries. Talk about a home-grown success story.
It gets even better – WiseTech has managed to grow revenue 44% in 2018 compared to the previous year (to $221.6 million). Earnings (EBITDA) also grew by 45% over the same period. When a company's revenue graph looks like a steep set of stairs, you know things are looking good.
What is truly promising about the company though is the stickiness of its product – WiseTech reports that its customer attrition rate every year for the past 6 years has been less than 1%. The company is constantly innovating and 'trying new things' – 34% of revenue currently goes into R&D and product development investment for the future, which is also very promising.
Is it too late to buy in?
However, this brings us to the price – it's not a good look for anyone wanting to get in. WiseTech shares are currently trading for around the $27.80 mark – which gives WiseTech a price-to-earnings (P/E) ratio of 200 (ouch). This means that if current earnings stay flat, it would take 200 years to recoup your investment! Of course, with a knockout company like WiseTech, revenue is almost certain to grow at a healthy rate for many years. But the price is leaving WiseTech absolutely no room for error and that's not something I personally like to see in a stock price.
Foolish takeaway
A fantastic company like WiseTech deserves a forward-looking share price, but for me, anything approaching a century, let alone two, is too long to wait! Long story short, at these prices, it is indeed too late to buy WiseTech (at least for me) and I personally will be watching the stock for a far more reasonable buying opportunity in the future.
