Endava: Management Is Also Responsible For Value Deterioration

Summary

• Endava faces a temporary slowdown and higher operating costs but offers high potential returns if demand rebounds, warranting a "Hold" recommendation.
• The company specializes in digital strategy and software engineering, with a significant client base in the financial sector, notably Mastercard.
• Management’s capital allocation and cost decisions have led to value destruction, with a significant decline in EPS and free cash flow.
• Despite challenges, conservative estimates and a CEO with significant ownership suggest potential, but management improvements are crucial for shareholder value.

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Investment Thesis

Endava (NYSE:DAVA) is a UK small-cap listed on the NYSE, operating in a sector with expected growth higher than the GDP of any country, but currently dealing with a temporary slowdown and higher operating costs compared to some

Analyst’s Disclosure:I/we have a beneficial long position in the shares of DAVA, NGRRF either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.