Investment Q&A

DFY’s valuation is quite attractive at 14.7x forward P/E with the growth outlook for revenue and EPS looking very strong in 2024 (low double-digit). Revenue has continued to grow this year although this has slowed in the recent quarter with growth of just 3.7%. Margins declined in Q3, but EPS and revenue have beaten estimates in the two previous quarters. DFY has a net cash balance of $188.1M. There is a low forward dividend yield of 1.58%. DFY definitely faced cost pressures recently which may have been driven by claim losses in Q3 which hurt its profitability. Still, the growth outlook looks positive in 2024, and valuation is attractive despite the slight slowdown in Q3. We would be comfortable owning it. 

HPS.A certainly has positive momentum recently, but the shares are still trading at 19x Forward P/E for a double-digit grower (18% on average in the last five years), we think the valuation is still reasonable and would be okay to average into the position over time. Some other growth names that are still trading at reasonable valuations that we like such as CLS, TVK.