Should You Buy the Dip in SP Plus Stock?

NASDAQ: SP | SP Plus Corporation News, Ratings, and Charts

SP – Business services company SP Plus (SP) delivered impressive performance in its last reported quarter. Moreover, it expects robust results this year also. However, the stock has dipped more than 2% in price over the past month. Does this represent an opportunity to scoop up the stock? Read on to find out.

Specialty business services company SP Plus Corporation (SP) in Chicago provides mobility solutions, parking management, ground transportation, baggage, and other ancillary services in North America. The company operates through the broad segments of Commercial and Aviation.

SP delivered solid growth in its last reported quarter. Furthermore, it expects its non-GAAP gross profit for its fiscal year 2022 to lie between $200 million and  $220 million, while its non-GAAP net income and non-GAAP EPS are expected to come in between $56 – $61 million and $2.59 – $2.83, respectively.

SP’s stock has gained 7.1% in price year-to-date and 7.6% over the past three months to close yesterday’s trading session at $30.21. However, the stock has declined 2.5% over the past month. SP is currently trading 16.8% lower than its 52-week high of $36.30.

Solid Bottom Line

For its fiscal fourth quarter, ended December 31, SP’s total services revenue increased 40.3% year-over-year to $343.20 million. Its non-GAAP gross profit rose 42.5% from the prior-year quarter to $49.30 million, while its non-GAAP operating income improved 143% from the same period the prior year to $20.90 million. Its non-GAAP net income attributable to SP and non-GAAP EPS came in at $10.90 million and $0.51, respectively, up 2,080% and 2,450% from the prior-year period.

Favorable Analysts Estimates

The $0.44 consensus EPS estimate for the quarter ended March 31, 2022, indicates a 63% year-over-year increase. Likewise, the consensus EPS estimate for the quarter ending June 2022, and fiscal 2022 of $0.66 and $2.64, respectively, reflects a 34.7% and 36.8% improvement from the prior-year periods. The Street’s $153.80 million, $159.05 million, and $660.65 million respective revenue estimates for the same periods indicates a 28.4%, 16.5%, and 9.8% rise year-over-year. The company’s EPS is expected to increase 10% per annum over the next five years.

Affordable Valuations

In terms of its forward non-GAAP P/E, SP is currently trading at 11.38x, which is 35.7% lower than the 17.69x industry average.Its 0.81 forward non-GAAP PEG multiple is 42.2% lower than the 1.41 industry average. In terms of its forward Price/Sales, the stock is trading at 1.05x, which is 22.6% lower than the 1.35x industry average.

Impressive Profit Margins

SP’s trailing 12-month EBIT margin, EBITDA margin, and levered FCF margin of 12.19%, 16.36%, and 8.59%, respectively, are 27.54%, 23.20%, and 100.74% higher than their 9.56%, 13.28%, and 4.28% respective industry averages.

And its  15.63% trailing 12-month ROE  is 13.23% higher than the 13.81% industry average.

POWR Ratings Reflect Promising Prospects

SP’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

SP has a Growth and Sentiment grade of A, which is consistent with its solid bottom-line growth reported in the last quarter and its favorable analyst sentiments.

The stock has a B grade for Value in sync with its affordable valuations.

In the 43-stock Outsourcing – Business Services industry, SP is ranked #6. The industry is rated B.

Click here to see the additional POWR ratings for SP (Momentum, Stability, and Quality).

View all the top stocks in the Outsourcing – Business Services industry here.

Bottom Line

SP is expected to benefit from the growing business services market, given its sound fundamental positioning. According to International Data Corporation (IDC), the worldwide IT and business services revenue is expected to grow 5.6% in 2022, with the Americas service market expected to grow 5.3% this year. The stock is currently trading cheaply compared to its peers. Also, given the favorable analyst expectations regarding the stock, I think investors should take advantage of the dip and scoop up SP shares now.

How Does SP Plus Corporation (SP) Stack Up Against its Peers?

While SP has an overall POWR Rating of B, one might consider looking at its industry peers, ARC Document Solutions, Inc. (ARC) and Civeo Corporation (CVEO), which have an overall A (Strong Buy) rating, and The Brink’s Company (BCO) and TriNet Group, Inc. (TNET), which have an overall B (Buy) rating.

Note that TNET is one of the few stocks handpicked by our Chief Value Strategist, Steve Reitmeister, currently in the POWR Value portfolio. Learn more here.

SP shares were unchanged in premarket trading Wednesday. Year-to-date, SP has gained 7.05%, versus a -6.01% rise in the benchmark S&P 500 index during the same period.

About the Author: Anushka Dutta

Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research. More...

More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
SPGet RatingGet RatingGet Rating
ARCGet RatingGet RatingGet Rating
CVEOGet RatingGet RatingGet Rating
BCOGet RatingGet RatingGet Rating
TNETGet RatingGet RatingGet Rating

Most Popular Stories on

Bullish or Bearish Stock Set Up?

The S&P 500 (SPY) record highs sounds pretty darn bullish on the surface. Yet as we dig below the surface there are some curious signals that point more Risk Off. This is especially true as we come into the next Fed meeting after a round of data that points to inflation still being too high...only further delaying the first rate cut. What does this all mean for stocks from here? Steve Reitmeister offers his latest views on the market outlook along with a preview of his top picks to stay on step ahead of the market. Read on for more...

3 High-Yield Dividend Stocks to Boost Your Portfolio

Even though inflation appears to be cooling down, it still remains above the Fed’s 2% target. Amid ongoing geopolitical tensions, investors could consider looking into high-yield dividend stocks, Verizon Communications (VZ), Altria Group (MO), and Ares Capital (ARCC). Keep reading...

3 Fintech Stocks Revolutionizing Financial Services

Fintech is causing a revolutionary shift in the financial services market and this could be the right time to scoop up fundamentally strong fintech stocks like PayPal Holdings (PYPL), NerdWallet (NRDS), and Qifu Technology (QFIN). Read more...

3 Value Stocks With Strong Fundamentals to Buy Now

Value investing is highly favored as it focuses on purchasing undervalued stocks with solid fundamentals, providing the potential for high returns with lower risk and a disciplined, long-term approach. Therefore, it could be wise to invest in fundamentally sound, value stocks Expedia Group (EXPE), Incyte (INCY), and Albertsons Companies (ACI) for substantial long-term returns. Keep reading...

Stock Alert: Breakout or Fake Out?

The S&P 500 (SPY) officially made new highs this week. Perhaps a reason to celebrate more gains on the way...or perhaps there are signs this move is hollow leading to more downside soon on the way. To help solve this riddle, 44 year investment veteran Steve Reitmeister shares his views along with a trading plan and top picks to stay on the right side of the action. That is what Steve Reitmeister will cover in his latest commentary below. Read on for more...

Read More Stories

More SP Plus Corporation (SP) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All SP News