RingCentral a solid buy.
It’s time to talk about another software name! Here is the breakdown on $RNG otherwise known as RingCentral.
Current Price: $282.50
52/Wk High: $317.839
52/Wk Low: $134.85
Read below for the breakdown!
RingCentral is a software service provider, otherwise known as a SaaS company. RingCentral provides a vast array of products.
Currently RingCentral offers a variety of products including RingCentral Office, RingCentral Professionals, RingCentral Glip, RingCentral Contact, and much more
Given the pandemic and new digital age RingCentral is seeing astounding growth, and at the end of the day that makes complete sense.
Office work is moving onto digital platforms and companies will pay subscriptions for each employee so the employee can carry out their work online.
In Q2 alone RingCentral did fantastic, reporting subscription revenues growth of 32% and RingCentral Office APR growth of 36%.
Taking a look at the most recent quarter, Q2, RingCentral beat expectations for the 11th time in a row.
RingCentral reported a Q2 beat with an EPS of $0.24 versus the expected EPS consensus estimate of $0.20. Furthermore, revenue also continued to grow and came in at $278 million, up 29.20% since Q2 of 2019.
Not only did RingCentral beat on Q2 earnings, but the company also raised guidance. Management raised Q3 expectations along with full year guidance.
For Q3 management now expects total revenues of $283.5 million to $289.5 million (21% to 24% growth) along with subscription revenues of $263 million to $265 million (25% to 26% growth).
For the full year, RingCentral raised total revenue expectations to a range of $1.135 billion to $1.143 billion (26% to 27% growth). Furthermore, non-GAAP EPS expectations were also raised to a range of $0.92 to $0.94, up from the previous range of $0.91 to $0.94.
Taking a look at the balance sheet the numbers aren’t bad. When last reported in Q2, $RNG maintained a Total Debt level of $1.053 billion along with a Total Liabilities level of $1.416 billion.
Furthermore, RingCentrals Total Assets expended in Q2 to $1.965 billion and the Cash & Short term Investments level fell to $774 million.
Like most software names, when it comes to pricing, RingCentral is relatively expensive;
Price to Sales: 24.69x
Price to Book: 46.46x
Price to Cash Flow: 343.12x
Market Cap: $25.1 billion
Given the consistent and positive growth the analysts are extremely bullish on RingCentral. Currently the mean price target is $339.81/share, representing a 20.29% gain.
Secondly the high price target sits at $370.00/share, representing a 30.97% upside, while the low price target is $300/share, representing a 6.19% gain.
The big money is also very bullish on RingCentral. Currently, 97.60% of RingCentral is owned by institutions. Top holders include Capital World Investors, The Vanguard Group, and Jennison Associates.
When taking a look at the charts opportunity could be at hand. Currently according to the six-month charts the MACD sits within an upward momentum bound range of 3.18 down to 1.05.
The six-months chart is also flashing an RSI level of 54 which is neither good nor bad, along with a bullish CCI coming in at 85.71.
In short given both the positive growth forecasts along with bullish sentiment around the board, RingCentral is a buy at its current levels in my opinion both on a short and long term investment time frame.
EAT - SLEEP - PROFIT
Disclaimer: This is not direct financial advice, simply opinion based on independent research.