Analysis of Usu Software

Company: Usu Software

ISIN DE000A0BVU28 | WKN A0BVU2

Business: Usu Software is a Germany software company. They mainly stand on two legs: Product Business (with for instance infrastructure management, software license management,  finance management and process management) and secondly Service Business (with for instance consulting services for IT projects).

Active: as any software company world wide but main activity in Germany, Switzerland, the Czech Republic, Austria and the United States.

P/E: 35.6

This company was analysed due to a request posted on the Analysis Requests page. 

The P/E for Usu Software is awful with 35.6 and the P/B is also nothing to jump around in joy over with its 3.4 and this then gives a clear no go from Graham. The earnings to sales I find surprisingly low for a software company with 9% and the ROE is also not that impressive with 9.7%. The book to debt ratio is however good with 1.9.
In the last five years they have had an excellent yearly revenue growth rate of 9.2% which gives a motivated P/E of 22 to 26 which still means that Usu Software is today overvalued on the market.
The spend a crazy amount on R&D since it correspond to 175% of their earnings but my bet is on that they have shuffled almost all salary costs into that category which I doubt is a true reflection of reality.
They pay a tiny dividend, which I would even advice them to stop paying, of 1.6% which still correspond to almost 60% of their earnings.

Conclusion: Graham says no and so do I. The founding family is still sitting on over 50% of the shares which can be seen upon as both good and bad. Almost all the "assets" are goodwill and intangibles. They themselves do however seem to consider the future to be very bright since they are making massive advertisements for hiring new people. So... P/E, P/B, ROE and dividend are all bad and besides from that I find the company to be too small for being of any interest.

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