Stephen Simpson, CFA
Long only, growth at reasonable price, value, research analyst

Aspen Technology - Trees Don't Grow To The Sky

I'm a fan of the industrial and process automation sector, as I believe automation is a major factor in reducing operating costs across a variety of industries. As a leading provider of process optimization software, and one of the very few that is not captive within a much larger company, makes Aspen Technology (NASDAQ:AZPN) a company worth knowing.

Valuation is problematic here. A forward EV/EBITDA ratio of over 31 and a forward EV/revenue ratio of over 10 certainly underline some of my concerns. Even though potential long-term free cash flow growth of 10% is quite attractive, it takes some pretty unconventional thinking to argue that Aspen is any kind of bargain today.

What They Do

Aspen sells a...

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