E2open Parent Holdings Inc a Great Way to Play the Global Supply Chain Crunch

Why Institutional Investors Love ETWO Stock

Global supply chains are under threat as the COVID-19 pandemic continues to wreak havoc on the movement of goods. While this is negative overall, it means opportunities for logistics companies.

Consider E2open Parent Holdings Inc (NYSE:ETWO), a provider of a cloud-based supply chain platform that combines artificial intelligence and machine learning in real time.

Whether it’s sourcing raw materials, work-in-process goods, or finished products—or dealing with transportation logistics, tariffs, and import fees—companies like E2open Parent Holdings Inc should thrive.

Strong Financial Growth Bodes Well for E2open Stock

ETWO stock only debuted on the market in February 2021, so the company’s financial reporting history is short. But so far, it has been promising.

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In fiscal 2021 (ended February), E2open Parent Holdings Inc produced revenues of $330.0 million; earnings before interest, taxes, depreciation, and amortization (EBITDA) of $56.4 million; and a generally accepted accounting principles (GAAP) loss of $0.19 per diluted share. (Source: “E2open Parent Holdings Inc.” MarketWatch, last accessed November 22, 2021.)

Analysts estimate that the company’s revenues will ramp up to $453.6 million in fiscal 2022, followed by 36.1% to $617.3 million in fiscal 2023. (Source: “E2open Parent Holdings, Inc. (ETWO),” Yahoo! Finance, last accessed November 22, 2021.)

Trading at 6.2 times its consensus 2022 revenue estimate, E2open Parent Holdings Inc isn’t cheap, but considering the current high valuations for growth stocks, E2open stock doesn’t look out of place.

Chart courtesy of StockCharts.com

As far as the company’s bottom line goes, E2open Parent Holdings Inc is expected to report an adjusted loss of $0.72 per diluted share in fiscal 2022 and follow that with adjusted profits of $0.13 per diluted share in fiscal 2023.

While its free cash flow (FCF) was a negative-$1.0 million in fiscal 2021, the company could move into positive FCF territory by fiscal 2022. (Source: MarketWatch, op. cit.)

E2open Parent Holdings Inc’s balance sheet is manageable. The company held $531.0 million in debt and $473.1 million in cash at the end of August. (Source: Yahoo! Finance, op. cit.)

Analyst Take

If you like following the institutional money, note that 178 institutional investors control nearly all of E2open Parent Holdings Inc. As long as the institutions don’t begin to sell their ETWO stock, there should be some support. (Source: Yahoo! Finance, op. cit.)

E2open stock has also been seeing net buying from insiders. These are the guardians of the company who have a vested interest. Over the last six months, insiders added a net 14.4 million shares of E2open stock.

So, while the short term could be challenging, E2open Parent Holdings Inc appears to be well positioned for future share-price growth.