Section 1: Company Overview and Fundamentals

1.1 Company Overview:

American Software, Inc. (American Software) (NASDAQ: AMSWA) develops, markets, and supports a portfolio of software and services that delivers enterprise management and supply chain solutions to the global marketplace. The Company is engaged in the development, marketing, and support activities of a range of computer business application software products.

Kalkine’s Dividend Income Report covers the Company Overview, Key positives & negatives, Investment summary, Key investment metrics, Top 10 shareholding, Business updates and insights into company recent financial results, Key Risks & Outlook, Price performance and technical summary, Target Price, and Recommendation on the stock.

Stock Performance:

• The stock has corrected by 11.07% in the last three months as well as by 25.44% in the past six months.
• The stock is leaning towards the lower band of its 52-week range of USD 15.88 and 52-week low price of USD 9.38, with the current price inside a decent support range of USD 9.00-USD 10.00, from where the price has taken a support in the past. Levels of USD 10.50-USD 11.00 are key resistance , if broken the price is estimated to achieve both technical resistance levels.
• The price is currently below both its short-term (50-day) SMA and long-term (200-day) SMA, with the current oversold RSI of 27.32, with expectations of a short-term upward momentum or some consolidation.

1.2 The Key Positives, Negatives, and Investment summary

1.3 Top 10 shareholders:

The top 10 shareholders together form ~37.65% of the total shareholding, signifying diverse shareholding. The Vanguard Group, Inc., and Kayne Anderson Rudnick Investment Management, LLC are the biggest shareholders, holding the maximum stake in the company at ~6.39% and ~6.20%, respectively. 

1.4 Consistent dividend payments with impressive dividend yield:

American Software, Inc. (NASDAQ: AMSWA) declared a quarterly dividend of USD0.11 per share, as confirmed by its Board of Directors. This dividend will be distributed to both Class A and Class B Shareholders, with the record date set as February 2, 2024, and the payment scheduled for around February 16, 2024. The company has maintained a steady dividend payout for the last two decades, as evidenced by historical data.

The consistent dividend distribution over the past 20 years reflects AMSWA's commitment to returning value to its shareholders. The Board's decision to declare the dividend demonstrates confidence in the company's financial stability and performance.

1.5 Key Metrics

In comparison to industry medians, AMSWA demonstrates stronger financial performance as highlighted by various key metrics. AMSWA exhibits robust profitability with higher EBITDA Margin, Operating Margin, Pretax Margin, and Net Margin, illustrating its strong operational efficiency and profitability in the industry.

Section 2: Business Updates and Financial Highlights

2.1 Recent Updates:

The below picture gives an overview of the recent updates:

 2.2 Insights of Q2FY24:

Section 3: Key Risks and Outlook:

Section 4: Stock Recommendation Summary:

4.1 Price Performance and Technical Summary:

Stock Performance:

• The stock has corrected by 11.07% in the last three months as well as by 25.44% in the past six months.
• The stock is leaning towards the lower band of its 52-week range of USD 15.88 and 52-week low price of USD 9.38, with the current price inside a decent support range of USD 9.00-USD 10.00, from where the price has taken a support in the past. Levels of USD 10.50-USD 11.00 are key resistance , if broken the price is estimated to achieve both technical resistance levels.
• The price is currently below both its short-term (50-day) SMA and long-term (200-day) SMA, with the current oversold RSI of 27.32, with expectations of a short-term upward momentum or some consolidation.

       

4.2 Fundamental Valuation

Valuation Methodology: Price/Earnings Multiple Based Relative Valuation

Markets are trading in a highly volatile zone currently due to certain macroeconomic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is November 21, 2023. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: The report publishing date is as per the Pacific Time Zone.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

 Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

 Stop-loss: It is a level to protect against further losses in case of unfavorable movement in the stock prices.