Endava plc (NYSE: DAVA) Faces Market Challenges Despite Positive Earnings

• Endava plc (NYSE:DAVA) reported earnings per share of $0.329, surpassing estimates but experienced a 4% decrease in revenue year over year.
• The company's stock value has plummeted by more than 80% since early 2024, largely due to guidance not meeting investor expectations.
• Despite financial stability indicators like a debt-to-equity ratio of 0.29 and a current ratio of 2.18, DAVA set its full-year fiscal 2026 revenue and earnings targets below expectations.

Endava plc (NYSE:DAVA) is a British tech consultancy specializing in modernizing IT systems for large corporations. Despite its expertise, the company has faced challenges in the stock market. DAVA's shares have dropped by over 30%, and its stock value has plummeted by more than 80% since early 2024. This decline is mainly due to guidance that did not meet investor expectations.

On September 4, 2025, DAVA reported earnings per share of $0.329, surpassing the estimated $0.32. The company achieved a revenue of approximately $256.3 million, significantly exceeding the estimated $184 million. However, despite these positive results, the company's revenue decreased by 4% year over year, and its workforce was reduced by 5%. This indicates that while DAVA exceeded Wall Street's earnings-per-share estimate, it still faces challenges in maintaining consistent growth.

The company's recent earnings call featured key participants, including CEO John Cotterell and CFO Mark Thurston. Analysts from major financial institutions attended the call, highlighting the importance of DAVA's financial performance. Despite the positive earnings surprise, the company set its full-year fiscal 2026 revenue and earnings targets below expectations. CEO John Cotterell remains optimistic, attributing the challenges to a difficult macroeconomic environment.

DAVA's financial metrics provide insight into its current valuation. The company has a price-to-earnings (P/E) ratio of approximately 24.05, indicating the price investors are willing to pay for each dollar of earnings. Its price-to-sales ratio stands at about 0.56, suggesting that the market values the company's sales at just over half of its current market price. Additionally, the enterprise value to sales ratio is approximately 0.71, reflecting the company's total valuation relative to its sales.

Despite the challenges, DAVA maintains a relatively low level of debt compared to its equity, with a debt-to-equity ratio of about 0.29. The current ratio is approximately 2.18, indicating good short-term financial health. These metrics suggest that while DAVA faces hurdles in meeting investor expectations, it remains financially stable in the short term.