Appian Stock To $27?

Appian (APPN) stock has fallen 7.0% during the past day, and is currently trading at $38.07. Our multi-factor assessment suggests that it may be time to sell APPN stock. We have, overall, a pessimistic view of the stock, and a price of $27 may not be out of reach. We believe there are only a couple of things to fear in APPN stock given its overall Moderate operating performance and financial condition. But keeping in mind its High valuation, we think that the stock is Unattractive.

Below is our assessment:

Don’t get too attached to APPN stock, even if you love it. Stocks crash. High Quality Portfolio lets you navigate that risk.

Let’s get into details of each of the assessed factors but before that, for quick background: With $2.8 Bil in market cap, Appian provides a low-code automation platform that simplifies creating forms, workflows, reports, and user interfaces, alongside professional and customer support services globally.

[1] Valuation Looks High

This table highlights how APPN is valued vs broader market. For more details see: APPN Valuation Ratios

[2] Growth Is Very Strong

• Appian has seen its top line grow at an average rate of 15.6% over the last 3 years
• Its revenues have grown 16% from $596 Mil to $691 Mil in the last 12 months
• Also, its quarterly revenues grew 21.4% to $187 Mil in the most recent quarter from $154 Mil a year ago.

This table highlights how APPN is growing vs broader market. For more details see: APPN Revenue Comparison

[3] Profitability Appears Very Weak

• APPN last 12 month operating income was $6.3 Mil representing operating margin of 0.9%
• With cash flow margin of 10.9%, it generated nearly $76 Mil in operating cash flow over this period
• For the same period, APPN generated nearly $-7.3 Mil in net income, suggesting net margin of about -1.1%

This table highlights how APPN profitability vs broader market. For more details see: APPN Operating Income Comparison

[4] Financial Stability Looks Very Strong

• APPN Debt was $307 Mil at the end of the most recent quarter, while its current Market Cap is $2.8 Bil. This implies Debt-to-Equity Ratio of 13.5%
• APPN Cash (including cash equivalents) makes up $192 Mil of $612 Mil in total Assets. This yields a Cash-to-Assets Ratio of 31.3%

[5] Downturn Resilience Is Very Weak

APPN has fared much worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.

2022 Inflation Shock

• APPN stock fell 86.8% from a high of $235.24 on 27 January 2021 to $31.12 on 10 January 2023 vs. a peak-to-trough decline of 25.4% for the S&P 500.
• The stock is yet to recover to its pre-Crisis high
• The highest the stock has reached since then is $53.90 on 13 June 2023 , and currently trades at $38.07

 
2020 Covid Pandemic

• APPN stock fell 50.5% from a high of $63.30 on 18 February 2020 to $31.36 on 3 April 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 29 September 2020

But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read APPN Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

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