Swoop Holdings Limited offers fixed wireless and fibre services to wholesale, business, and residential customers in Australia. It provides internet and telecommunication, and fixed wireless broadband services; and services over the NBN fixed line and fixed wireless networks. The company was incorporated in 1987 and is based in Sydney, Australia.

Australia

Swoop Holdings Limited

Communication Services

The company does not pay dividends at all, or it pays them sporadically. There have only been a few years with dividend payments in the past ten years. 

SWP.AX reported revenue of AUD 63mn in the last 12 months, down 48% from FY23. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS grew 512% from FY23 to AUD -1.51. Market expects EPS to reach AUD 0.00 in FY25.

Over the past six months, the stock has consistently fallen, resulting in a 47% total decrease. When measured against its worldwide peers from the same industry (as shown above), the stock has been weaker, underperforming by 48ppts. This is equally valid for peers from the same country and industry. Given the stock's valuation versus its peers, its total price movement is slightly unfavourable.

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been -2.6 in the past several years. This ratio implies a fragile shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are minimal. In combination with stringent business standards, shareholder rights are very highly protected.

SWP.AX has very poor trading liquidity. It will take considerable time for the average private investor to sell a common position under normal market conditions. Liquidity is unstable and becomes extremely unfavourable on the days with the lowest activity. The trading volume mostly stays the same even under highly turbulent market conditions. Another factor to consider is the substantial number of days with zero trading volumes, i.e., without any ability to sell a position. The stock has a tiny market capitalisation, which usually makes its trading liquidity erratic and unpredictable. 

No other major risks have been identified.

The risk of default is high. Among the negative credit factors, we point to weak positions in its industry, slow historical revenue growth, bleak profitability, negligible return on capital, and inadequate interest coverage. We note low margin volatility, solid cash flow generation, and an favourable capital structure, among the positive credit factors. 

In highly turbulent market conditions, SWP.AX is exceptionally volatile. In other words, the stock will be among the worst-performers in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be critical. 

In normal market circumstances, SWP.AX is exceptionally volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will change quite unpredictably. The stock's losses on its worst days (less than 1-5% of the time) will range from critical to immense. 

Considering past and projected metrics, the stock is distinctly 'cheaper' than its peers. Specifically, the stock is undervalued on EV/EBITDA. 

Swoop Holdings Limited

A$ 0.1

3

Swoop Holdings Limited

A$ 0.1

3

Risk factor

Profitability factor

Risk / Profitability

Risk factor

Profitability factor

A$ 0.1

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