The Bravura Solutions share price is up 18% in a month: Is it too late to invest?

The Bravura Solutions Ltd (ASX:BVS) share price has been on fire over the last few weeks. Is it too late to invest?

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Over the last 30 days the Bravura Solutions Ltd (ASX: BVS) share price has been one of the best performers on the S&P/ASX 200 index.

During this time the shares of the provider of software products and services to clients operating in the wealth management and funds administration industries have recorded an impressive gain of 18%.

As a comparison, over the same period the benchmark index has fallen around 0.7%.

Why is the Bravura Solutions share price on fire?

Investors were fighting to get hold of Bravura Solutions' shares late last month following the release of a trading update at its annual general meeting.

That update advised that the company is on track to achieve its FY 2020 guidance of mid-teen net profit growth. This went down well with the market, which previously appeared a touch concerned that it was underperforming this year.

In addition to this, management revealed that its recent acquisitions are expected to contribute another $3 million in net profit. 

I estimate that this guidance implies a net profit of around $41 million in FY 2020, up from $32.8 million a year earlier.

Is the Bravura Solutions share price in the buy zone still?

I don't believe it is too late to invest and still see a lot of long-term value in Bravura Solutions' shares at the current level.

Based on approximately 244 million shares outstanding and its share price of $5.03, Bravura Solutions currently has a market capitalisation ~$1.25 billion.

This means its shares are changing hands at approximately 30x estimated forward year earnings. I feel this is reasonable given its strong long-term growth potential and compared to other tech valuations.

As a comparison, fellow tech shares Altium Limited (ASX: ALU) and Appen Ltd (ASX: APX) are trading at 51x and 46x estimated forward earnings.

Overall, I continue to believe it would be a great buy and hold option for investors to consider today.

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Bravura Solutions Ltd. The Motley Fool Australia owns shares of Altium and Appen Ltd. The Motley Fool Australia has recommended Bravura Solutions Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Growth Shares

$100 Australian notes on top of each other.
Growth Shares

Where to invest $10,000 into ASX shares in July

Analysts are raving about these shares. But why are they buys?

Read more »

Four piles of coins, each getting higher, with trees on them.
Growth Shares

2 ASX growth shares to buy this month: experts

These stocks are expected to have a strong next few years…

Read more »

Concept image of a businessman riding a bull on an upwards arrow.
Growth Shares

3 ASX growth shares to buy before the next bull market

These shares could fare well in the next bull market. Here's what analysts are tipping as buys.

Read more »

Two university students in the library, one in a wheelchair, log in for the first time with the help of a lecturer.
Growth Shares

3 no-brainer ASX shares to buy with $200 right now

You don't need a brain to see that these shares could be top picks right now.

Read more »

A man with a wide, eager smile on his face holds up three fingers.
Growth Shares

3 ASX growth stocks worth buying with $7,000 in your portfolio today

These stocks are all historic market beaters.

Read more »

Two smiling work colleagues discuss an investment or business plan at their office.
Growth Shares

3 ASX 200 shares with huge growth potential in the next decade

Analysts think these growth shares could be in the buy zone in July.

Read more »

A young woman sits at her desk in deep contemplation with her hand to her chin while seriously considering information she is reading on her laptop.
Growth Shares

Where I'd invest $5,000 into ASX 300 growth shares

These stocks have excellent growth potential.

Read more »

a woman sits at a computer with a satisfied expression on her face in a white room with greenery outside her window.
Growth Shares

The ASX growth stock up 10% this year with more room to move

This broker believes there’s still more in the tank for this telecommunications company 

Read more »