![]() ![]() While Lennox’s sales are at a higher level than Zendesk’s, the latter has witnessed much faster revenue growth over the years and has also posted a better performance during the recent period. However, considering the P/S for Lennox, too, to remain around current levels, we estimate the market cap to rise only around 2% over this period. In comparison, given historical trends, we expect Lennox’s sales to rise much slower at a CAGR of 1.6%, taking revenue in three years to $4.3 billion. Assuming Zendesk’s P/S ratio to remain roughly at the same level as now, this means that the market cap would rise to almost $22 billion, an upside of nearly 90% over three years. ![]() Zendesk’s LTM revenues of $1.2 billion are expected to rise at a CAGR of around 20.8% as per our estimates, taking revenue numbers three years out to as high as $2.2 billion. Using P/S as a base, due to high fluctuations in P/E and P/EBIT, we believe Zendesk is currently the better choice. Finally, Zendesk Is Ahead In Terms Of Expected Returns Further, Zendesk is ahead in terms of cash as a % of assets, too, with 66.6%, compared to Lennox’s 2.1%.įor additional details about Zendesk’s historical returns and comparison to peers, see Zendesk Stock Return. Īdditionally, Lennox’s debt as a % of equity stands at 9.4% currently, slightly higher than Zendesk’s 8.1%. For details about Lennox’s revenues and comparison to peers, see Lennox International Revenue Comparison. On a comparable basis, Lennox, a climate control products company, saw its sales rise from $3.6 billion in FY ’16 to around $4.1 billion on an LTM basis, a growth of almost 1.2x. Zendesk, a software service provider, has seen its sales rise from $300 million in FY ’16 to $1.2 billion on an LTM basis, a jump of 4x. While both companies have performed well since the pandemic, Zendesk has seen much stronger and faster revenue growth over the past few years compared to Lennox. Does this gap in the companies’ valuations make sense? We believe it does and we only expect this gap to widen. Zendesk stock trades at almost 10x trailing revenues, much more than that of Lennox, whose P/S multiple stands at 2.5x. currently is a better bet compared to Lennox International Inc. (Photo Illustration by Pavlo Gonchar/SOPA Images/LightRocket via Getty Images) SOPA Images/LightRocket via Getty Images UKRAINE - 4: In this photo illustration the Zendesk logo of an US software company is seen. ![]()
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