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SPS Commerce - AI Stock Analysis

Analysis generated February 10, 2025

SPS Commerce, Inc. (NASDAQ: SPSC) is a leading provider of cloud-based supply chain management solutions. They offer a comprehensive suite of services that streamline and automate supply chain management processes for retailers, suppliers, distributors, and logistics firms. By providing visibility, analytics, and collaboration tools, SPS Commerce helps clients achieve higher levels of efficiency and performance in their supply chains.

Fundamental Analysis

Revenue for the last quarter was $164M, which represents an increase of 6.57% compared to the previous quarter and an impressive year-over-year growth of 20.66%. This signifies a robust growth trajectory for the company.

Net income for the last quarter was $23M, marking a notable increase of 30.10% from the previous quarter and a significant rise of 39.29% from the same quarter last year. This indicates efficient cost management and operational efficiency.

EBITDA for the last quarter was $32M, a growth of 14.41% compared to the previous quarter and an increase of 31.39% year-over-year. This further demonstrates the underlying strength of the company's financial health.

However, the current Price-to-Earnings (P/E) ratio is 86.98, which may be considered high. A high P/E ratio could indicate that the stock is overvalued, possibly leading to a bearish outlook among potential investors.

Additionally, recent insider selling activity is a potentially bearish signal, implying that some insiders may feel the stock is overvalued or foresee potential issues.

Technical Analysis

Today's stock price is $177.13, which shows a decrease of 1.12% compared to a month ago and a worrying 16.05% decrease from a year ago. This declining trend may be alarming for long-term investors.

The Simple Moving Average for the last 10 days (SMA10) is 180.50, down from the previous SMA10 of 181.26. This suggests a potential downward trend in price movement, marking a bearish trend.

The Relative Strength Index (RSI) stands at 14.3, which indicates an oversold condition. While this might be viewed as a bullish signal for short-term traders looking to capitalize on potential rebounds, it also reflects the negative sentiment currently surrounding the stock.

Alternative Data Analysis

Customer acquisition shows that SPS Commerce has an estimated 730,000 visitors to its webpage. Unfortunately, this is down by 15% over the last couple of months, signaling potential customer loss—a troubling trend for future revenue growth.

AltIndex’s AI score for SPS Commerce is 49, suggesting a hold recommendation. This AI score incorporates fundamental, technical, and alternative data points, providing a holistic view of the stock's potential performance. A score of 49 indicates uncertainty and suggests that neither strong bullish nor bearish trends are dominant.

Conclusion

SPS Commerce exhibits strong fundamental health with impressive growth in revenue, net income, and EBITDA. However, caution is warranted due to a high P/E ratio suggesting possible overvaluation, recent insider selling, a declining stock price, and worrying technical signals such as a bearish SMA trend and an oversold RSI.

Furthermore, the decline in website visitors points to potential customer acquisition issues, which could negatively impact future performance. AltIndex's hold recommendation further supports a cautious approach.

Based on this mixed analysis, it may be prudent to approach SPS Commerce with a "Hold" strategy. Monitor the company's progress on key metrics closely, and remain vigilant for any positive signs of reversing trends before making significant investment decisions.

Disclaimer: This AI stock analysis, generated by an experimental AI tool, is for informational purposes only and not financial advice. Information is based on publicly available data and may not always be accurate or current.