NIC Inc. (NASDAQ : EGOV) is a digital software and services provider for federal, state and local governments. Recognized in 2013 as one of America’s best small companies by Forbes, EGOV has been in the news in February 2021 for its plan to be acquired by Tyler Technologies.
This Kansas based company is also engaged in developing payment processing solutions for state, local and federal governments. The stock reached its lifetime high during the dotcom boom and has been below that level for last 20 years. But in the recent times it has shown signs of reaching those levels and may be go beyond that. As the US comes out of the pandemic and more government organizations focus on the digital innovation NIC Inc. is going to benefit from this change.
Looking at Some Metrics for the Company
NIC Inc. reached it’s 5 year high level of 34.97 in Feb 2021 and has almost doubled in last 12 months when it reached levels of 18.29 during the pandemic in Feb 2020. NIC Inc. is a consistent dividend paying company over last few years and has been trading at a P/E of 33.59.
NIC Inc. (EGOV) has a market cap of 2.28B and has a forward P/E of 29 which indicates sustainable bottom line in medium term. The company has a healthy profit margin of approximately 13% and has decent revenue of 460M in the trailing twelve-month period.
One of the most important factors is it’s strong cash position in the balance sheet which is around 236M which is approximately more than 10% of the market cap of the company. This strong cash position is going to help the company weather through the uncertain macro-economic conditions in the short term. Also, the current ratio of 2.63 explains the good cash conversion cycle of the company. The revenue of the company has grown sequentially over the last 4 years reaching 460M in 2020 from 336M in 2017. Even though the dividend yield is not high enough at 1.06% the consistency of this yield is indicative of good corporate governance of the company
In summary, NIC Inc. is a small company with decent revenue, but as we witness more digital adoption across the Government organizations, we may witness medium term appreciation in the stock.