This week has been an eventful week for the Australian fintech industry with a number of quarterly updates and developments.
Three shares that have climbed notably higher since Monday are listed below. Which one of the platform providers should you buy?
Bravura Solutions Ltd (ASX: BVS)
Bravura Solutions is a leading provider of software solutions for the wealth management, life insurance, and funds administration industries. Its key product is its Sonata web-enabled administration solution. During the first half of FY 2018 the Sonata segment saw its revenue increase 35% to $56.7 million, meaning it now accounts for 55% of the company’s revenue. This is likely to rise further in the second half after yesterday’s announcement that it has signed a long term contract with Commonwealth Superannuation Corporation for Sonata. Bravura’s shares are currently priced at 25x trailing earnings and management has forecast underlying EPS growth in the high-teens.
Hub24 Ltd (ASX: HUB)
On Tuesday this investment and superannuation platform provider reported net inflows of $595 million in the third quarter. This was an increase of 42% on the prior corresponding period and lifted its total funds under administration (FUA) to $7.4 billion. As the third quarter is traditionally a soft quarter for HUB24, management believes this is an indication of even stronger inflows during the remainder of FY 2018. Based on Credit Suisse’s estimates, HUB24’s shares are changing hands at 122x FY 2018 earnings and 55x FY 2019 earnings.
Praemium Ltd (ASX: PPS)
At the start of the week this investment administration software provider reported combined gross inflows of $671 million. This was 39% higher than the prior corresponding period and took its funds under administration to a record $7.8 billion. Management appears confident in delivering more of the same in the future thanks partly to the launch of its International SMA product. Based on Morgans estimates, Praemium’s shares are changing hands at 88x FY 2018 earnings and 39x FY 2019 earnings.
Which should you buy?
My pick of the three would have to be Bravura on valuation grounds. Whilst I feel confident that both HUB24 and Praemium are capable of delivering growth that justifies the premium their shares trade at, I think Bravura’s shares simply offer more value for money right now.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Bravura Solutions Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.