SS&C Technologies: Riding Margins and Acquisitions to Undervalued Growth

SS&C Technologies (NASDAQ: SSNC) has emerged as a compelling story in the software sector, blending operational discipline with strategic acquisitions to drive growth. As of June 2025, the company's stock trades at what appears to be a discounted multiple relative to its earnings trajectory and margin improvements. Let's dissect the case for SSNC as an undervalued growth play.

Operational Turnaround: From Integration to Efficiency

SS&C's recent financial performance highlights a clear turnaround. Revenue grew 6.9% year-over-year in 2024 to $5.88 billion, with organic revenue expanding 6.0% excluding acquisitions. Crucially, the company has been leveraging acquisitions to boost its market share and cross-selling opportunities. Take the 2024 acquisitions of Battea and FPS Trust: these deals not only expanded SS&C's footprint in healthcare and trust services but also contributed to recurring revenue streams.

The underscores the company's shift toward high-margin recurring revenue. Financial Services Recurring Revenue grew 7.4% in Q4 2024, a testament to the stickiness of its software solutions. This recurring revenue model is critical, as it provides stable cash flows to fuel further growth and debt reduction.

Margin Improvement: The Real Story

While top-line growth is impressive, the margin expansion tells a deeper story. In 2024, GAAP operating margins improved 80 basis points to 22.8%, while Adjusted EBITDA margins rose 50 basis points to 38.8%. Even in Q1 2025, the GAAP operating margin expanded further to 23.6%. This reflects SS&C's focus on cost discipline and operational synergies.

The reveals a consistent upward trajectory, despite macroeconomic headwinds. The company's ability to reduce debt—its net leverage ratio dropped to 2.89x in Q4 2024—and repurchase shares ($365.7M in Q4 2024 alone) has freed up capital for reinvestment.

Undervalued Stock Metrics: A Contrarian Play?

At a June 2025 stock price of $82.80, SSNC trades at a trailing P/E of 25.88 but a forward P/E of just 13.88. Analysts project 2025 EPS growth of 11.6% to $5.96, making the stock's valuation appear attractively priced. The EV/EBITDA multiple of 14.06 is reasonable for a company with 8%+ revenue growth and high recurring revenue.

The shows SSNC is cheaper than its peers, which trade at 16-20x EBITDA. This could reflect investor skepticism about its debt load—total debt is $7.03 billion—but the company's $515M in cash and strong free cash flow ($1.4B TTM) provide a cushion.

Analysts' median price target of $93.57 implies a 13% upside, while the consensus “Strong Buy” rating suggests the market may be underestimating SS&C's turnaround.

Risks to Consider

SS&C isn't without warts. Its debt/equity ratio of 1.02 and Altman Z-Score of 1.6 (below the 3 threshold for bankruptcy risk) highlight leverage concerns. The company's reliance on large clients also introduces concentration risk. Moreover, its beta of 1.24 means the stock could underperform in a market selloff.

Investment Thesis: Buy the Margin Expansion Story

Despite the risks, SS&C's combination of margin growth, disciplined capital allocation, and undervalued stock metrics makes it a compelling buy. The company's focus on healthcare software—a sector with strong tailwinds—and its integration of AI/quantum technologies positions it for long-term relevance.

The reveals that the stock has underperformed relative to its improving fundamentals. This disconnect could close as investors recognize the margin and debt improvements.

Action Items:
- Buy: For investors seeking growth in enterprise software, SSNC offers a 13% upside to analyst targets and a 1.2% dividend yield.
- Wait: High volatility and debt concerns mean this isn't a “set it and forget it” stock.
- Avoid: If you prioritize low-leverage names or fear a tech slowdown, SSNC may not be your best bet.

Final Take

SS&C Technologies is executing a turnaround that combines organic growth with strategic acquisitions, all while improving margins and reducing leverage. At current valuations, the stock offers a rare mix of growth and value. While risks remain, the operational progress and undervalued multiples make SSNC a stock to watch in the software space.

Investors who can tolerate the company's debt profile stand to benefit from its margin-driven rebound.