I thought about it, but I personally really like the bigger picture and I often have a look at one of my older write-ups when I want to re-read some of the details that I knew while writing it up, but I forget such details fast. These write-ups are like a library for my portfolio companies :D I know that many will not read the complete write-up as its too long for them, but tbh I mainly do these write-ups for me at the moment and not for the reader that only wants short actionable ideas ;)
I respect that and i still love took the effort to hightlight this company. For me its a bit too small and when i looked at the valuation with the recent tech sell off there ar. neytet comps. Also the customers seem rather small too. Just a few thoughts.
I did buy wolters kluwer but didnr think good about it, now i look at other tech companies growing twice as fast as wkw and with the same valuation. Its slow work bc tech is hard to understand but i think companies where you need new recent data are best positioned.
I like articles that dig deep and have much respect for you writing this one. Keep it that way.
People will tell you it’s too long when in reality they‘re just not capable of reading for a good 10-15 minutes because the whole day they are just scrolling and watching 15 sec clips.
Thanks for the comment & great remark! I agree that the ROI has been disappointing at least since H1 2024. Before it has already been at 13% or higher, the analysts are expecting further improvement. The one analyst that is covering Circle is for example expecting ROIC of over 30% in 2027, but I think we all know what analysts are sometimes fantasizing :D ROI is definitely something one should have a close eye on going forward, but there are multiple aspects one should consider. As mentioned, although the recurring revenues are increasing, a substantial part of the business can still be lumpy, which of course also effects the EBIT from year to year. For example the LogIN Business or eFTI are taking much longer until the real implementation in the EU, but Circle has ongoing development costs already to be prepared for the actual implementation while having no are just small earnings effect. In addition, the multiple acquisition have an effect on the ROIC. Especially the smaller bolt-on acquisition have no material direct effect on the earnings. It takes some time until the acquired software is properly implemented into the Circle platform or until customers are convinced to buy an add-on solution. So there can be a certain downstream effect on the ROIC as the invested capital is an immediate effect, but the earnings effect takes some time. But thanks for highlighting that point, I should have included that in the write-up! :)
Unfortunately, I don't have any data before FY 2018. Since 2019, the average ROIC has been 10%. Any spending on growth will be wasted unless the ROIC increases. You will be better placed to judge whether the ~25% increase in the years ahead makes sense.
i scrolled to the end, make it shorter XD
I thought about it, but I personally really like the bigger picture and I often have a look at one of my older write-ups when I want to re-read some of the details that I knew while writing it up, but I forget such details fast. These write-ups are like a library for my portfolio companies :D I know that many will not read the complete write-up as its too long for them, but tbh I mainly do these write-ups for me at the moment and not for the reader that only wants short actionable ideas ;)
I respect that and i still love took the effort to hightlight this company. For me its a bit too small and when i looked at the valuation with the recent tech sell off there ar. neytet comps. Also the customers seem rather small too. Just a few thoughts.
Thanks for the feedback :) What are your favorites in the recent tech selloff?
I did buy wolters kluwer but didnr think good about it, now i look at other tech companies growing twice as fast as wkw and with the same valuation. Its slow work bc tech is hard to understand but i think companies where you need new recent data are best positioned.
I like articles that dig deep and have much respect for you writing this one. Keep it that way.
People will tell you it’s too long when in reality they‘re just not capable of reading for a good 10-15 minutes because the whole day they are just scrolling and watching 15 sec clips.
I enjoyed that one, thanks!
Thanks for the feedback! :)
Unfortunately, this share cannot be traded with a German broker... or can it?
I bought it with CapTrader/IB
Interactive Brokers lists it, I don't know if I (American) can actually buy it.
> its work underpins the operational backbone of ports, intermodal hubs, and supply-chain participants across Europe.
If so, why's ROIC ~ WACC (or even lower, and not just the latest FY)?
Thanks for the comment & great remark! I agree that the ROI has been disappointing at least since H1 2024. Before it has already been at 13% or higher, the analysts are expecting further improvement. The one analyst that is covering Circle is for example expecting ROIC of over 30% in 2027, but I think we all know what analysts are sometimes fantasizing :D ROI is definitely something one should have a close eye on going forward, but there are multiple aspects one should consider. As mentioned, although the recurring revenues are increasing, a substantial part of the business can still be lumpy, which of course also effects the EBIT from year to year. For example the LogIN Business or eFTI are taking much longer until the real implementation in the EU, but Circle has ongoing development costs already to be prepared for the actual implementation while having no are just small earnings effect. In addition, the multiple acquisition have an effect on the ROIC. Especially the smaller bolt-on acquisition have no material direct effect on the earnings. It takes some time until the acquired software is properly implemented into the Circle platform or until customers are convinced to buy an add-on solution. So there can be a certain downstream effect on the ROIC as the invested capital is an immediate effect, but the earnings effect takes some time. But thanks for highlighting that point, I should have included that in the write-up! :)
Thank you for the details.
Unfortunately, I don't have any data before FY 2018. Since 2019, the average ROIC has been 10%. Any spending on growth will be wasted unless the ROIC increases. You will be better placed to judge whether the ~25% increase in the years ahead makes sense.
Thanks for the great write-up. Circle SpA was on my to do list for quite some time !!