Bentley Systems: Growth Stock with Promising Future Ahead

Bentley Systems is poised for growth as it excels in infrastructure software. With strong annual recurring revenue growth and a solid retention rate, it appears well-positioned in the digital transformation of engineering processes.

Date: 24-01-2025

AI Rating: 7

Overview of Bentley Systems’ Performance

Bentley Systems (NASDAQ: BSY) is highlighted as a leading growth stock within the infrastructure-engineering sector. The report emphasizes its commitment to aiding infrastructure projects through digital transformation, which is expected to yield significant cost savings and efficiency improvements.

Key Metrics Indicating Performance

Bentley Systems showcases impressive financial metrics which are important for investors. Specifically, its annualized recurring revenue (ARR) is growing at a low-teens rate. This growth rate is seen as a strong indicator of Bentley's future potential, cementing its position in a fast-evolving industry.

The company also excels in retaining and expanding revenue from existing customers, demonstrated by its 12-month recurring net retention rate remaining above 100% for at least six years. This consistent performance suggests high customer satisfaction and loyalty, essential for sustained growth.

Valuation Insights

Despite its robust growth metrics, Bentley's valuation is high, trading at 43 times its expected earnings for 2024. However, given the ARR and revenue growth rates, coupled with a projected mid-teens growth rate for free cash flow, it suggests that the stock may align well with its valuation over the long term. The report predicts a likely increase in its price-to-free-cash-flow multiple to 33 by the end of 2025, indicating a fair valuation for a company with its growth profile.

Investment Consideration

Before considering an investment in Bentley Systems, it’s crucial to analyze their comprehensive approach to the infrastructure software market. With an emphasis on digital twins and high earnings visibility, the company presents a compelling case for long-term investment, although caution is advised due to its current valuation status.

Stocks: BSY