A software firm is growing like a startup but priced like a utility, creating a contradiction the market cannot ignore for long.
PTC (PTC) makes the complex software that companies use to design and manage physical products, from high-performance engines to medical devices
Yet after a year where its stock fell -27.9%, the market seems to have lost the plot. The company’s revenue grew 27.7% over the last twelve months, but its stock offers an earnings yield of 8.4%, nearly double the 4.5% risk-free rate from a 10-year Treasury bond. High growth and high yields are not supposed to coexist.
This raises a sharp question: Is the market correctly pricing in a coming collapse, or is it overlooking a profound mispricing? Why does the math suggest PTC’s growth is free? An investor buying PTC at its recent price of about $124.98 a share pays a trailing price-to-earnings multiple of 11.9x.