The Wisetech share price is down 33% this year, despite the fact the company’s rolling in cash. What gives?

A woman looks nonplussed as she holds up a handful of Australian $50 notes.A woman looks nonplussed as she holds up a handful of Australian $50 notes.

The WiseTech Global Ltd (ASX: WTC) share price had a rather pleasant day this Wednesday. The software-as-a-service (SaaS) logistics company enjoyed a healthy 2.79% bump today, closing trade at $40.85.

Even so, this positivity doesn’t quite cover WiseTech’s recent woes. The ASX 200 tech share is still down by 2.97% over the past five trading days. As well as down a nasty 30% or so over 2022 thus far.

These share price woes are despite the fact that WiseTech’s books are in far better shape than many other ASX tech shares. As my Fool colleague Brooke covered last month, WiseTech had a robust $380 million in cash and no debt when the company last reported its earnings (for the half-year ending 31 December).

Not only that, but WiseTech also reported an 18% jump in revenues for the half to $281 million. It also reported a 77% rise in underlying net profit after tax (NPAT) to $77.3 million. The company jacked up its interim dividend as well, to 4.75 cents per share, fully franked. That represented a 75.9% increase over the previous year’s interim dividend. And a 23.4% increase over the company’s previous final dividend.

So if everything is going WiseTech’s way, why has the company’s share price been falling so dramatically?

Why has the WiseTech share price been hammered in 2022?

Well, we can’t be completely sure. But it is worth noting that ASX tech shares of most shapes and sizes have been suffering severely over the year so far. Amid rising inflation and interest rates, ASX shares have been extremely volatile over 2022.

And it’s ASX tech shares that have been among the hardest hit. To illustrate, the S&P/ASX All Technology Index (ASX: XTX) is now down almost 32.5% over 2022. So it’s not as though WiseTech’s woes are isolated.

Another factor to consider is WiseTech’s valuation. As it currently stands, WiseTech shares are trading on a price-to-earnings (P/E) ratio of over 90. This is extremely high by conventional standards, and still shows that investors are pricing in a lot of growth into the WiseTech share price.

It also means that WiseTech’s P/E ratio was even higher at the start of the year at well over 100. So perhaps investors have decided to trim what they are willing to pay for WiseTech shares in light of increased global uncertainty.

But this could well present a buying opportunity too. As we covered last month, analysts at Macquarie Group, as well as fund manager Marcus Today, are both bullish on WiseTech shares right now.

According to reporting in the Australian Financial Review (AFR) last month, here’s what Macquarie had to say on WiseTech’s valuation:

WiseTech is still looking expensive on an enterprise value-to-sales multiple versus its own history, the company is now trading in-line with its historical one-year forward enterprise value-to-earnings before interest, tax, depreciation, and amortisation multiple and is thus looking fairly valued.

At the current WiseTech Global share price, this ASX 200 tech share has a market capitalisation of $13.34 billion, with a dividend yield of 0.21%.

The post The Wisetech share price is down 33% this year, despite the fact the company’s rolling in cash. What gives? appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended WiseTech Global. The Motley Fool Australia has positions in and has recommended WiseTech Global. The Motley Fool Australia has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia

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