The Citadel
(ASX: CGL) share price has risen 41% this week. It’s going like a rocket.
What is Citadel Group?
Citadel describes itself as a leading software and services company that specialises in secure information management in complex environments. Formed in 2007, its name comes from the idea of being a medieval fortress to defend against invaders.
Citadel’s software helps client management make real-time decisions in health, national security, defence, education and other industries. Citadel now has more than 200 employees and offices in most of Australia’s capital cities.
Technology share valuation explained
The following video explains how to value technology shares using SaaS multiples and popular valuation metrics.
Why is Citadel rocketing?
Citadel shares, like the market as a whole, have been going up strongly this week.
Just over a week ago, Citadel gave an update to say that whilst the full effect of COVID-19 is uncertain, no significant projects or contracts have been delayed or canceled in this period. It said it manages 42% of Australia’s public pathology data and is working to support health providers to adopt new technology to support COVID-19 testing.
However, the company did say that it has taken measures to reduce operating expenses, manage cashflow and defer non-essential capital projects. Citadel said the Wellbeing acquisition is on track and the dividend will be paid. Wellbeing is a global healthcare software business.
A couple of days ago the software company held an extraordinary general meeting to approve the Wellbeing acquisition which has a 59% market share of radiology of NHS acute trusts in England. The retention rate is over 99% with the average relationship among the top 10 customers being over 12 years. Plus, 70% of revenue is recurring with EBITDA margins of around 40%.
Investors seem to really like the acquisition as shareholders approved the buy. It could be a very good acquisition.
These technology shares could also be good long-term investments:
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Disclosure: at the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.
