Pushpay 5 years out, page-40

Hi Rokewa,
"Undervalued" vs "overvalued" comes down to what measures a person applies and then at what level the balance moves from under to over.
"Growth" companies can become overvalued on some people's measures and values, even if they later move to become undervalued again.

I think PPH is undervalued at present because of the significant shareholder sell-downs and I am hoping that with the next announcement of results that it will pick up a bit again. A restraining factor, however, is its reducing operating margin. In fact, based on revenue and SP to revenue at margin it has moved backwards a bit in value over the past 12 months but still remains in a mid-range compared to other growth companies that I have on my tracking list. Regardless, I am looking to sell down without selling out because of its underperformance.

I use my own valuation measure for PPH based on margin on revenue to share price. I note that PPH in its latest announced results showed that its margin has decreased somewhat. Now that may be a temporary hiatus or it may be that the company's growth is slowing as it has picked off the low fruit and now has to work (spend) harder to get more fruit.
I am willing to give PPH the benefit of the doubt on its margin and penetration of the largest churches, at least until the next interim result but it does give me concern all the same.
Then, of course, there are the sell downs by the Crowthers, Heaslips and Huljichs. Regardless of the circumstances, this spooks the market and leads it to think the best is over.
In effect, the risk of holding PPH at present has increased. Perhaps the company will extend its sales activity into new areas and regain the earlier margins (such as moving into large churches in lightly held US states or extending its activities into other charitable based organisations) but I suspect that it is finding it harder to make these sales or it requires more development activity for its products to appeal (both of which increase costs to achieve the same revenue growth).
Personally, I doubt that PPH will continue its earlier growth rate and that its margin will continue to decrease as a result. This should not be a surprise. PPH is not like the FANGs that offer services to billions of users. It deals with a much more limited pool of churches in the USA and even then has been targetting large churches. Unlike Facebook, Netflix, Amazon or Google it is not a household name and is unlikely to become such.
Interestingly, PPH of late has been making more reference to educational and charitable organisations as target customers. In other words, they see the need to extend their customer base beyond churches.
I have been holding PPH for the past 3+ years but over the past 2 years it has been in a steady decline. Maybe it will spring into life again soon, or perhaps it will receive a take-over offer from some company in the US (don't count on it though).