AmDocs: Strong Earnings, Strong Backlog, A 10% Dividend Boost

Seeking AlphaDividend Ideas | Tech AmDocs: Strong Earnings, Strong Backlog, A 10% Dividend BoostDec. 6, 2020 5:00 PM ET|| About: Amdocs Limited (DOX), Includes: AMZN, CMCSA, DIS, IGV, T, T.PA, T.PC, TBB, TBC, TMUS, V, VOD, VODPFby: Michael FitzsimmonsMichael Fitzsimmons Technology, ETFs, Renewable Energy, Oil & gas, GoldSummaryIn September I suggested AmDocs was undervalued and for the stock it appeared to be "Time To Play Catch-Up".
Since that article, and buoyed by a strong Q4 EPS report last month, the stock's move higher appears warranted and has more room to run.
Revenue, earnings, the backlog, free-cash-flow, and the dividend are all growing. Yet the forward P/E is only 13.9x.
DOX is undervalued and a BUY.

Back in September I reviewed billing and customer-care software company Amdocs (DOX) on Seeking Alpha and liked what I saw (see DOX: Time To Play Catch-Up). In an sea of arguably supremely valued software companies, Amdocs was on sale with a P/E significantly below the average S&P500 and drastically lower than its software peers. Since that time, the stock has moved higher and the Q4 EPS report and 10% increase in the dividend validate the upward trajectory in shares. Going forward, a strong backlog, record results in the EU, 5G and the cloud, plus the recent Openet acquisition - which has already born fruit with a new AT&T (T) contract - are all positive tailwinds.
Q4 Earnings
DOX's Q4 EPS report was released last month and it beat the midpoint of previous guidance. Highlights included:
Revenue of a record $1.05 billion was up 2.0% yoy and came in at the high end of previous guidance (1,015-$1,055 million). GAAP net income was $134.5 million ($1.01/share): up 12.2% yoy. GAAP operating margin was 14.0%. For full-year 2020, GAAP earnings of $3.71/share were up 6.9% as compared to $3.47/share in full-year 2019. DOX generated $145.1 million of free-cash-flow ("FCF") during the quarter and $452.6 million of FCF for... Read more