Manhattan Associates(US:MANH) The Motley Fool·2025-01-30 21:01Core Viewpoint - Shares of Manhattan Associates experienced a significant decline of approximately 25% following its fourth-quarter earnings report, which, despite beating expectations, provided disappointing guidance for 2025 [1][3]. Financial Performance - Heading into the fourth quarter, Manhattan Associates was trading at 63 times free cash flow (FCF) and had achieved an average sales growth of 16% over the past three years, indicating high market expectations [2]. - The company reported a 7% revenue growth and a 14% adjusted earnings per share (EPS) growth, surpassing analysts' expectations [3]. Future Guidance - The guidance for 2025 projected only a 2.5% revenue growth and a 5% decline in adjusted EPS, leading to a reassessment of the company's valuation by the market [3]. Market Position - Despite short-term cyclicality affecting services revenue, Manhattan Associates maintains strong long-term prospects, being recognized as a leader in order management and point-of-sale systems by Forrester [4]. - The company is the first software provider to lead in both order management and point-of-sale systems, providing a competitive advantage as retail shifts towards omnichannel operations [5]. Growth Indicators - Remaining performance obligations (RPO) increased by 25% from the end of 2023, suggesting that the anticipated growth deceleration in 2025 may be short-lived [5]. - The company's valuation stands at 47 times FCF, with a remarkable return on invested capital (ROIC) of 82%, indicating a potentially strong investment opportunity at a more reasonable price [6].