💡 Bill Holdings, Inc. (NYSE: BILL) has seen a sharp decline this year, with shares dropping nearly 40% year-to-date. Once a high-flying stock, now overlooked by many, BILL still holds significant potential. At its height, the stock traded above $300 per share, but slowing growth and small business churn have hit hard. However, this might be an opportunity for savvy investors to step in.
📈 Despite recent challenges, BILL’s latest results show promise. In Q4, revenue grew 16% year-over-year, surpassing expectations. The company now serves 474,600 businesses, up 3% compared to last year. Total payment volume also increased to $75.9 billion, a 10% year-over-year jump. While the broader market seems hesitant, these numbers suggest BILL still has room to grow.
💼 BILL’s current valuation is compelling. At around $48 per share, its market cap stands at $5.10 billion. With $1.59 billion in cash and $914 million in debt, BILL’s enterprise value is $4.42 billion. The company projects $1.42-$1.45 billion in revenue for FY25, making its EV/FY25 revenue multiple just 3.1x. Add a 20% free cash flow margin, and BILL looks undervalued.
🛠️ BILL’s biggest challenge is its small business focus. SMBs have been hit hardest in this economic climate, leading to increased churn. However, BILL plans to roll out new products aimed at improving customer retention. Their efforts to enhance their platform and expand into new markets could drive future growth and bolster confidence among investors.
💸 In a show of confidence, BILL has also announced a $300 million share repurchase program. For investors looking to capitalise on an undervalued stock with strong fundamentals, now could be the perfect moment to consider BILL. As the market remains cautious, this stock may offer substantial upside for those willing to take the leap.
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IMPORTANT: This article is of general nature only and readers should obtain advice specific to their circumstances from professional advisers.