SSNC Is Delivering Strong Cash Yield, Are You Paying Attention?

Here is why we think SS&C Technologies (SSNC) is worth a look

• Cash Yield: Not many stocks offer free cash flow yield of 5.6%, but SSNC does
• Fundamentals: Last 12 month revenue growth of 6.7% and operating margin of 22.9% show good fundamentals
• Valuation: At PE of 26.6, this combo of cash yield, revenue growth, and margin could get noticed
• Compared to S&P, while you get higher valuation, you further get higher LTM revenue growth, and better margins

Free Cash Flow Yield refers to free cash flow per share / stock price. Why it matters? If a company produces high amount of cash per share, it can be used to fuel additional revenue growth, or simply paid through dividends or buybacks to shareholders. For quick background, SS&C Technologies provides software products and services for financial and healthcare industries, covering securities accounting, trading, portfolio management, reporting, and healthcare solutions across global markets.

But do these numbers tell the full story? Read Buy or Sell SSNC Stock to see if SS&C Technologies still has an edge that holds up under the hood.

That is one way to look at stocks. Trefis High Quality Portfolio evaluates much more, and is designed to reduce stock-specific risk while giving upside exposure

The Point? The Market Can Notice, And Reward

Here are some stocks that showed strong cash flow yield in mid 2024, and saw strong returns in the subsequent 12 months

• FFIV gained 70% in a year after showing a 6.9% free cash flow yield
• CSCO had 6.6% yield, and returned 50% in the next 12 months
• PM rose over 85% percent as the market noticed its 5.7% free cash flow yield and good underlying revenue growth

But Consider The Risk

That said, SSNC isn’t immune to sharp sell-offs. It fell about 36% during the 2018 correction, nearly 48% through the Covid pandemic, and around 44% in the recent inflation shock. Even with strong fundamentals, the stock has shown significant vulnerability when broader market turmoil hits. Bottom line: favorable factors matter, but steep dips can still happen.

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 SSNC Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

Picking winners on a consistent basis is not an easy task – especially given the volatility associated with a single stock. Instead, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.