The past decade has dramatically shifted how businesses operate and engage with customers. Rapid technological advancement has transformed entire industries at an unprecedented pace.

Once dominant companies just a few decades ago have struggled to adapt. Legacy processes and systems that worked for decades are now hindering their ability to keep up with rising customer expectations.

Younger, more nimble startups have seized the opportunity to disrupt from the edges using new technologies that were previously unimaginable.

This digital transformation is about much more than just adopting the latest apps or implementing cloud infrastructure. True change requires rethinking business models from the ground up.

It means optimizing every touchpoint with AI and data-driven personalization. It means empowering remote work at scale through collaboration tools. It means delivering hyper-personalized, convenient experiences that anticipate customer needs.

For many organizations, this level of transformation is simply not possible without outside expertise. Building the required technical capabilities and cultural mindset from within can take years if not decades.

This is where digital consultancies have emerged as crucial partners for businesses of all sizes. They provide the specialized skills, frameworks, and experience needed to successfully navigate disruption.

One such company at the forefront of this digital transformation is Endava (DAVA).

Endava is a leading digital transformation services firm that has demonstrated an ability to consistently grow even during periods of macroeconomic uncertainty.

The company is benefiting from the ongoing digitization of business across all industries. The COVID-19 pandemic accelerated the adoption of digitalization. Even as macro conditions fluctuate, the underlying need for IT modernization and improved customer/employee experiences will remain intact.

Endava has developed deep expertise across high-impact domains like cloud, data/AI, and customer experience.

It leverages these competencies through a consulting-led engagement model to help clients transform everything from core operations to front-end interactions.

This approach has resonated well with both long-standing and new customers, driving a consistent revenue CAGR of 28.9% between 2019 and 2024.

A key advantage is Endava’s entrepreneurial culture, which it fosters through strategies like profit sharing and an employee stock purchase program.

This helps the company attract and retain top tech talent globally. It has a presence across North America, Europe, and Asia Pacific with over 11,000 employees. The scale provides opportunities to take on larger deals while maintaining a startup mindset of agility.

Looking ahead, Endava is well-positioned to capture more spending allocated to emerging technologies like AI and machine learning.

Management aims to integrate these solutions more pervasively to deliver additional value to clients. If successful, it could accelerate the company’s growth trajectory and further cement client relationships.

The firm boasts a 63% Uniform return on assets (ROA) with asset growth of 30%.

Despite these financial metrics, Endava’s market valuation suggests significant untapped potential.

The company currently trades at a 21x P/E ratio, around the corporate average. This conservative valuation indicates that the market has not fully recognized or rewarded Endava for its achievements.

With its strong culture, expanding capabilities in high-growth areas, and exposure to secular demand trends, Endava appears well-positioned to continue delivering shareholder value over the long run.

Best regards,

Joel Litman & Rob Spivey
Chief Investment Strategist &
Director of Research
at Valens Research

Today’s highlight, Endava (DAVA) is one of the top stock picks from FA Alpha 50 this month. To see more stock picks like this, become an FA Alpha and get access to FA Alpha 50.