CCRD - CoreCard Corporation: Poor Execution And Uncertainty Over The Turnaround

2024-05-30 18:20:20 ET

Summary

• Although CoreCard has solid technology—which is further supported by the clients they serve—my primary worries are with the poor execution of the management and the uncertainty around the turnaround.
• Because of its reliance on Goldman Sachs, CoreCard has experienced revenue concentration risk, which has resulted in diminishing revenue and profitability.
• Apart from the above reasons, I am uncomfortable with the 21x EV/EBIT multiple that the company is currently trading at.
• I rate the company as a hold.

Overview of CoreCard and Investment Thesis

CoreCard ( CCRD ) provides their proprietary card and account management software solutions to customers across the fintech industry in managing their credit, debit and prepaids and loan accounts, and process transactions. Its key competitive advantage lies in its patented software which is designed to be scalable in handling and processing a massive amount of accounts and transactions. This is evidenced from its customers such as Goldman Sachs (GS) and its recent win, Bank of California, which validate the value proposition of its platform....

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