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Amdocs is a leading software and services solutions provider to companies in the communications, media, and entertainment industries. The company also serves providers of mobile financial services. Amdocs offers business support systems, operational support systems, and managed services solutions in 5G, Media, Cloud, Digital, and Automation. The company serves predominantly tech-based clients, companies that build the future, and Amdocs ensure they ‘Make it Amazing’. Some of its products and services include Catalogue Management, IoT, Network Engineering, Consulting, Network & Service Automation, OTT & Digital Subscription, Content Management Services, Monetisation, and SI Services. Amdocs was founded in 1982 and is headquartered in Chesterfield, Missouri, US.
While Amdocs is now a US company, it traces its roots to Israel, where it emerged as an offshoot of the famed phone directory company, Golden Pages. The company started out by developing a billing software program for phone directory companies, but in the 1990s, it sought to enter the booming telecommunications space, an industry that promised so much potential. In 1995, Amdocs launched Ensemble, a billing and customer care software for the telecommunications industry. This was the beginning of the company’s foray into an industry that was about to witness explosive growth. As new technologies emerged and mobile telephony grew, telecom companies demanded more Customer Relationship Management software to support their various services to their customers. This opened up a lucrative opportunity for Amdocs, a pioneer and leader in the CRM space. Before the turn of the millennium, Amdocs focused on organic growth, but in the 21st century, the company has complemented its existing operations and has entered new spaces by being an active M&A player. Some of its recent acquisitions include Sourced Group, Solect Technology Group, Pontis, Celcite, and XACCT Technologies.
On June 19th, 1998, Amdocs went public with its stock listing on the Nasdaq and trading under the ticker symbol DOX. The stock is categorised in the Technology sector, under the Software-Infrastructure industry.
DOX Stock History
The Amdocs stock debuted with an IPO price of $14. The company has never implemented any stock split in its history.
DOX stock got off to a flying start, immediately embarking on a sharp rally that saw it peak at its all-time high just below $90 by March 2000 (as of November 2021). Then, the tech bubble burst, coupled with negative investor sentiment, triggered a selloff of the stock that tumbled to lows of circa $6 by October 2002. Since then, the stock has largely maintained a steady upward trajectory, and it now trades firmly above the $73 mark as of November 2021.
Amdocs operates a lucrative business model that has guaranteed steady cash flows derived from long-term contracts with top global companies. This has enabled the company to offer consistent and sustainable dividend payouts to its shareholders. In recent years, the dividend yield for Amdocs has averaged 1.95%.
How to Trade Amdocs Stock
Here are some of the factors to consider when trading Amdocs stock:
- Legislative and Taxation Issues – Amdocs faces diverse legislative issues due to the nature of its business. There is growing legislation in areas such as privacy and data security, and they vary in context within the various jurisdictions that Amdocs offers its products and services. The company also has to deal with contract agreements with its various customers, and in an industry that is always evolving. Amdocs also has to deal with taxation issues that it constantly faces in different jurisdictions. Although the company is US-based, it is registered in the Island of Guernsey for tax purposes, and this attracts constant scrutiny of its tax books.
- Competition and New Product Rollout – Although a leader in customer experience solutions in the communications and media industries, Amdocs faces increasing competition as the market becomes more fragmented and dynamic. This means that its space attracts competition from players such as Oracle, SAP, and Convergys. In a rapidly evolving industry, new product rollouts can determine the fate of Amdocs as well as its competitors.
- Negative PR and Lawsuits – Amdocs has never been far away from controversies. In the early 2000s, the company was investigated for an alleged role in aiding Israeli espionage of American communications. In recent years, the company has hit the headlines with possible tax and accounting fraud investigations. While no conclusive reports have proven these allegations, the company’s tendency of attracting controversy is a concern to investors. Negative headlines generally tend to impact investor sentiment, and they can provide massive headwinds for the DOX stock.
- Periodic Earnings Reports – The Amdocs fiscal year runs from October 1st to September 30th. The company releases quarterly earnings reports which paint a picture of their business performance in the market. Some of the metrics and factors to watch out for include Revenues, M&A Investments, Dividend Payouts, as well as Debt Levels. Strong numbers tend to support higher DOX stock prices, whereas weak figures tend to pressure the DOX stock lower.
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** Disclaimer –While due research has been undertaken to compile the above content, it remains an informational and educational piece only. None of the content provided constitutes any form of investment advice.