Mensch und Maschine Software: EPS Misses Expectations, But Is This A Buying Opportunity?

Ladies and gentlemen, buckle up! We've got a wild ride ahead as we dive into Mensch und Maschine Software's full-year 2024 earnings report. The company, a powerhouse in the CAD/CAM/BIM sector, has just released its annual report, and while the earnings per share (EPS) missed expectations, there's more to this story than meets the eye. So, let's break it down and see if this is a buying opportunity or a red flag!

First things first, let's talk about the elephant in the room: the EPS miss. Mensch und Maschine Software reported an EPS of 180 cents per share, which was a 4.8% increase from the previous year. While this might sound impressive, it fell short of analyst expectations. But before you hit the panic button, let's look at the bigger picture.

The company has been making significant investments in internal IT systems, the transition to the new autodesk commission model, and the development of its own software products. These investments are crucial for long-term growth, but they come at a cost. The transition to the new Autodesk commission model and the development of proprietary software solutions required substantial resources, which may have contributed to the EPS missing expectations.

But here's the thing: despite these challenges, Mensch und Maschine Software achieved a record cash flow of EUR 62.32 million, a 23% increase from the previous year. This is a testament to the company's strong financial health and its ability to navigate short-term challenges.

Now, let's talk about the future. CFO Markus Pech has given an optimistic guidance for 2025/26. He expects an EPS growth of 9-19% for 2025, with a planned dividend rise to 205-215 cents. For 2026, EPS growth is projected at 13-25%, with further dividend increases. Chairman Adi Drotleff reiterates the medium-term target of doubling profits within 4-5 years, aiming for an EPS exceeding 360 cents by 2028 or 2029.



So, what does this mean for investors? Well, if you're looking for a company with a strong financial foundation, significant growth potential, and a commitment to rewarding shareholders, Mensch und Maschine Software might just be the ticket. The EPS miss is a bump in the road, but the company's strategic investments and record cash flow suggest that it's well-positioned for sustained growth and increased earnings in the coming years.

But remember, folks, this is a no-brainer! The market's reaction to Mensch und Maschine Software's stock following the EPS miss has been relatively stable, with a slight decline over the longer term. Analysts have a price target of EUR 70.00, indicating a potential upside from the current stock price. Additionally, the company's dividend yield is 3.3%, which is not well covered by earnings, suggesting some concern about dividend sustainability.

So, do you want to own this stock? Or are you going to sit on the sidelines and watch as Mensch und Maschine Software continues to grow and thrive? The choice is yours, but remember, this is a company with a strong track record, significant growth potential, and a commitment to rewarding shareholders. Don't miss out on this opportunity!