Agilysys: Take Caution As Macro Headwinds Brew (Rating Downgrade)

2025-05-20 07:30:00 ET

Summary

• I'm downgrading Agilysys to a neutral rating after the company's Q4 earnings print, as its FY26 outlook gives little cause for excitement.
• When factoring in the recent Book4Time acquisition, Agilysys' organic growth for the year is hovering at only ~10% y/y.
• The company could see upside from its ongoing large-scale rollout with Marriott, but without any contribution from that deal expected this year, AGYS stock looks rich at ~7x forward revenue.
• Agilysys' outlook is also calling for minimal adjusted EBITDA margin expansion in FY26, making the stock's ~36x forward adjusted EBITDA multiple overvalued as well.

Agilysys Overview

With the stock market sitting near lofty YTD highs and wiping out all traces of the post-tariff declines, it's almost tough to remember that we may be in or entering a recession. We've already seen indicators turn south across a number of industries, including retail, restaurants, and travel....

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