IRI - Integrated Research

[finicky]

Picked IRI agaIn for the monthly comp, what do I care?
The chart hash't changed much since my last post. There was a pullback over the last two weeks of July but on low relative volume. The weekly bollinger bands are pinching which is new and signifies lulling volatility - sometimes the calm before a move. But frankly, bottom grazing stocks like this can go on for years (14 months so far) or as a long odds roughie you can get lucky and see a multi-bagger within a year.
Full year results came in mid August last year (Aug 18), so this month I'm feebly hoping for a small beat on recent guidance, or better still, a robust outlook commentary re FY24

Held

WEEKLY

 

[finicky]

Last chance to get onboard this little firecracker, lol.
Reports full year on Friday. That's when it leaves the other August comp wannabes choking in the dust and I pack my bags for Vegas.

WEEKLY

 

[galumay]

I am a chicken, waiting until Friday to peruse the details!

 

[finicky]

Report out. I'll have to let others makes sense of it. Just opaque to me with stark differences between statutory and 'pro forma' results. Very underwhelming and I'm not sensing a rosy outlook for 2024.
Total Contract Value up.
Big $32m impairment - mostly good will and other intangibles
Cash holding went up a bit on pcp but that might be from cracking down on trade debt owed by clients.
Just a yuck vibe and I'm cancelling my Vegas ticket (but holding the stock).

Outlook:

 

[Dona Ferentes]

Reports full year on Friday. That's when it leaves the other August comp wannabes choking in the dust and I pack my bags for Vegas.

I thought you were off to Vega, 5th brightest star in the firmament, and only 25 light years or 7.7 parsecs away.

 

[finicky]

^^^
Wikipedia freak

 

[galumay]

Well the FY2023 result is out for IRI and the FCF has definitely improved. The earnings are written off by an impairment of $31m, mostly for legacy software that has been superseded by the SaaS offerings, but the opportunity was taken to write down all sorts of assets when you look through the financials.

So how should we look at IRI? Is it a turn around opportunity? Could it have a rerate going forward? My initial high level take is it's far too expensive still. Normalised earnings were probably 1-1.5c per share, yes FCF has turned around, but as @finicky has pointed out it's nearly entirely due to more discipline around receivables, is that sustainable? Hard to tell, its the lowest its been for 7 years, but then revenue has fallen over that period so very hard to know what normalised working capital looks like.

My takeaway is that I can't really value on current year FCF, without a large margin of safety. I would probably assume a FCF of nearer the normalised earnings, maybe 2c per share. A back of the envelope range for that is around 50-60c which is pretty much what its been priced at recently.

In the end I think its in the too hard basket for me, it doesn't look really cheap, there are a lot of moving parts and no clarity of a path to growth and profit at this stage. In its favour it does have cash & no debt and there are signs of a turn around. I just don't think it's compelling enough for me to find sufficient conviction. So it either has to get a lot cheaper, or a lot better before I would be seriously interested!

 

[finicky]

Yeah, I wouldn't buy it either after this lame looking result and stated outlook. Not even with the stellar bottom forming appearance of the chart.

Held

 

[galumay]

Damn, bound to go up 20% if we are both negative on it.

 

[divs4ever]

Well the FY2023 result is out for IRI and the FCF has definitely improved. The earnings are written off by an impairment of $31m, mostly for legacy software that has been superseded by the SaaS offerings, but the opportunity was taken to write down all sorts of assets when you look through the financials.

So how should we look at IRI? Is it a turn around opportunity? Could it have a rerate going forward? My initial high level take is it's far too expensive still. Normalised earnings were probably 1-1.5c per share, yes FCF has turned around, but as @finicky has pointed out it's nearly entirely due to more discipline around receivables, is that sustainable? Hard to tell, its the lowest its been for 7 years, but then revenue has fallen over that period so very hard to know what normalised working capital looks like.

My takeaway is that I can't really value on current year FCF, without a large margin of safety. I would probably assume a FCF of nearer the normalised earnings, maybe 2c per share. A back of the envelope range for that is around 50-60c which is pretty much what its been priced at recently.

In the end I think its in the too hard basket for me, it doesn't look really cheap, there are a lot of moving parts and no clarity of a path to growth and profit at this stage. In its favour it does have cash & no debt and there are signs of a turn around. I just don't think it's compelling enough for me to find sufficient conviction. So it either has to get a lot cheaper, or a lot better before I would be seriously interested!

that was my take as well ... back on my low priority watchlist

 

[galumay]

...all 3 of us!! It's headed to the moon!???

 

[Dona Ferentes]

^^^
Wikipedia freak

I knew that

 

[frugal.rock]

Last Wednesday I was pondering going to Vegas with Huck @finicky
and buying some IRI.
I didn't buy.

On Thursday, boy was I kicking myself. I was really thinking that Huck Fin was a legend.

On Friday, a telegram came from Vegas..., It said,
"The house always wins in the end".

Today, a telegram came from Vegas again, it said, "refer to Fridays telegram". ???

Poor Huck.II feel for you buddy.

 

[finicky]

I am rather crushed, lol.
I should've taken the 3 or 4 grand profit the day before and lit out for BrisVegas

 

[divs4ever]

I am rather crushed, lol.
I should've taken the 3 or 4 grand profit the day before and lit out for BrisVegas

BrisVegas is over-rated IMO , in fact moved more than 100 miles away

more and more criminals prowling there and still years away from the Olympic Games , liable to get worse

but taking the profit at a good moment is a real art

 

[Telamelo]

I am rather crushed, lol.
I should've taken the 3 or 4 grand profit the day before and lit out for BrisVegas

Yeah unfortunately @finicky .. much easier in hindsight as the art of knowing when to sell & take profit/loss is the most difficult/important imo (hardest part of trading) the easy part is buying lol
Good luck!

 

[finicky]

Like a fizzy drink left overnight, my excitement for IRI has died but I see it as a reasonable sleeper holding now - a long term spec based on the chart mostly but the chart combined with IRI's past history of high profitability, elite clients and feeble turnaround performance (I hear).
Due to its bottom draw relegation I am now preferring the monthly chart for guidance. I might well add if the price nears 25c.

Spec:
Held and Holding

MONTHLY

 

[Dona Ferentes]

the future of disambiguated research... or not. Just meaningless words IMO

.

Integrated Research's valuation questioned amid price volatility​

|
Published Nov 07, 2023 20:46

Integrated Research Limited (ASX:IRI) has been subject to substantial price volatility on the ASX, swinging between AU$0.51 and AU$0.30 over the past few months, with a current trading price of AU$0.32. This fluctuation has sparked queries about its valuation, with some questioning whether the company is appropriately valued or undervalued.

According to a valuation model, Integrated Research is priced approximately 5.24% above its intrinsic value of A$0.30 (USD1 = AUD1.5562), suggesting limited room for price appreciation at its present level. Nonetheless, the company's high beta, signaling notable stock movement against the broader market, indicates potential future buying opportunities during periods of increased volatility.
Looking ahead, Integrated Research's promising outlook is emphasized by anticipated revenue growth in the teens in the coming years. If expenses do not rise at a comparable rate, this projected revenue growth should lead to strong cash flows, potentially contributing to an increase in share value.

Despite the current pricing concerns, Integrated Research's robust future prospects could offer potential for shareholders if the company can successfully leverage its expected revenue growth and manage its expenses effectively.

InvestingPro Insights​

Real-time data from InvestingPro indicates that Integrated Research Limited's (ASX:IRI) earnings per share (EPS) have grown by 15% in the last twelve months as of Q1 2023. This is a positive signal for potential investors, as it suggests improved profitability and a possible increase in share value. Additionally, the company's Price-to-Earnings (P/E) ratio is currently at 18.5, which is slightly below the industry average, indicating that the stock could be undervalued..
.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

 

[galumay]

I think you nailed it @Dona Ferentes, typical AI generated rubbish.

Mind you actual real analysts say crap like this too, "According to a valuation model, Integrated Research is priced approximately 5.24% above its intrinsic value of A$0.30" Show me a valuation model accurate to 2 decimal % points and I will show you a charlatan.

Then there is this rambling nonsense, "Nonetheless, the company's high beta, signaling notable stock movement against the broader market, indicates potential future buying opportunities during periods of increased volatility." - Volatility indicates buying opportunities during more volatility!

"Despite the current pricing concerns, Integrated Research's robust future prospects could offer potential for shareholders if the company can successfully leverage its expected revenue growth and manage its expenses effectively." - Despite being a basket case, if management pull off a miracle, it might be worth a punt.

"Additionally, the company's Price-to-Earnings (P/E) ratio is currently at 18.5, which is slightly below the industry average, indicating that the stock could be undervalued." ORLY?

No wonder so many people lose money on the ASX when this is the standard of professional advice, should lose their ASFL for rubbish like this.

 

[finicky]

My bottom grazing spec stock showing some improvement 1H24 on 1H23.
Eat your heart out
Only down -19% on this folly now.

Held

WEEKLY