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Is the WiseTech Global Ltd (ASX:WTC) share price good value?

The WiseTech Global Ltd (ASX: WTC) share price has fallen by around 25% during the past month, but I’m not sure it’s good value yet.

Yesterday, the global logistics software business announced the acquisition of Swedish customs and logistics provider, CargoIT.

CargoIT offers customs management solutions along with freight forwarding, warehousing and transportation solutions to over 100 customers including DHL, Mondelez International, Mitsubishi Motors and Hyundai.

The purchase price comprises of $1.8 million upfront and a further potential earn-out of $1.8 million. The business generates annual revenue and earnings before interest, tax, depreciation and amortisation of around $2 million and $0.3 million respectively.

As per WiseTech’s other acquisitions, it said that this is not material to the WiseTech Global group. It highlighted that it has made recent acquisitions in Argentina, Australasia, Belgium, Brazil, Canada, France, Germany, Ireland, Italy, the Netherlands, North America, Spain, Taiwan, Turkey, the UK and Uruguay.

Quite the list, isn’t it? These acquisitions form part of the strategy of “long-term organic growth through targeted valuable acquisitions.”

My worry is that WiseTech has acquired so many businesses over the past two years that there may be some integration problems. I also worry that all these acquisitions may be boosting growth to look better than it is.

Foolish takeaway

Whilst I’m sure CargoWise One is a quality offering for clients, I fear that 85x FY19’s estimated earnings is too high a price to pay for WiseTech in a rising interest environment, although it could do well over the long-term. Although, I admit it is now better value than it was with a share price above $20.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of WiseTech Global. 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.

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