S&P/ASX 200 Index (ASX: XJO) stock Technology One Ltd (ASX: TNE) has made its shareholders very happy this year.
How happy?
Well, on 2 January, you could have bought shares in the software company at intraday lows of just $15.27. At the time of writing, shares are up 1.0%, changing hands for $31.18 apiece.
That sees the Technology One share price up 104.2% year to date.
Or enough to turn a $5,000 investment into $10,209.56.
For some context, the ASX 200 has gained 18.7% so far in 2024.
But following that meteoric rise, is it time to take some profits from this high-flying ASX 200 stock?
Time to sell this outperforming ASX 200 stock?
Despite its strong full-year results, Seneca Financial Solutions' Arthur Gallipoli believes the ASX 200 stock may have flown too high too fast (courtesy of The Bull).
"This software-as-a-service provider posted a strong fiscal year 2024 result," said Garipoli, who has a sell recommendation on Technology One shares.
As for those strong FY 2024 results, he noted, "Profit after tax of $118 million was up 15% on the prior corresponding period. Total revenue of $515.4 million was up 17%."
But Garipoli believes the soaring share price has been overdone.
"The shares have risen from $15.85 on May 17 to trade at $30.40 on November 28," he said.
Indeed, shares have continued to rise since 28 November, up another 2.6% at today's intraday level of $31.18.
According to Garipoli, "In our view, the shares have risen too quickly and are overvalued. The company is trading on a lofty price/earnings ratio. Investors may want to consider locking in a profit at these levels."
The ASX 200 stock trades at a price-to-earnings (P/E) ratio of around 84 times.
After this year's big share price surge, Technology One now commands a market cap of $10.2 billion.
What's been happening with Technology One?
In addition to the strong metrics that Garipoli quoted for FY 2024, the ASX 200 stock also increased its full-year dividend payout by 16% to 22.5 cents per share.
That represents a 62% payout ratio, and it sees Technology One shares trading at a slender, partly franked trailing yield of 0.7%.
Commenting on the strong full-year results on 19 November, the day the company reported, CEO Ed Chung said:
Our ability to deliver these results is due to Technology One's clear vision, strategy, culture and our significant investment in R&D, which has been validated in March 2023 as we entered the ASX 100 index.
The ASX 200 stock closed up 10.1% on the day.
