Been having a look over Atlassian and whether it is worth investing in. Not a big fan to be honest.
The Return on Equity is not great, at a very lowly 3%. Yet, if it has a Beta of say 1.3 (like ServiceNow, a competitor), that would imply a cost of capital of 7.5%. I just don't see the company being able to increase the ROE to that level (especially as they lost money last year and were saved by a tax credit)
On the plus side, Leadership looks ok...fairly diverse board with plenty of IT experience.
Going deeper into the fundamentals; based on the FCFF formula, I calculate the price being around $9.61 a share, which is way lower than the $26.26 on offer at the moment, especially when it is a fairly competitive area. I don't see the growth potential.
And for those who think I am unpatriotic, well, the company is domiciled in the UK!
Note: Not a recommendation to invest or not invest in Atlassian. If pain persists, see your financial advisor.
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