In a market flooded with headlines about soaring tech giants, it’s easy to overlook solid businesses that quietly deliver value. However, the best investment opportunities are not always the flashiest. In reality, they’re the ones hiding in plain sight. With strong fundamentals, consistent performance, and long-term potential, this small-cap stock could provide significant value to patient investors.
Asure Software (ASUR), valued at $274.5 million, is a small-cap company that offers cloud-based human capital management (HCM) solutions to help small and medium-sized businesses manage their payroll, human resources, tax compliance, and employee benefits. ASUR stock has risen 13.2% year to date, outperforming the broader market.
Impressed with its first-quarter earnings, Wall Street analysts project the stock could soar as high as 85% from current levels.
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Asure reported first-quarter revenue of $34.9 million, a 10% increase year-over-year. Core business revenue increased 13%. Management attributed the company’s strong performance to continued momentum in its Payroll Tax Management product, as well as growing traction in its Payroll, Benefits, and Marketplace offerings. Recurring revenue totaled $33.2 million, up 10% from the prior year, accounting for 95% of overall revenue. This substantial amount of recurring revenue is a strong indicator of business stability and client retention.
While the company reported a $2.4 million net loss, adjusted EBITDA increased to $7.3 million, compared to $6.8 million a year ago. Importantly, CFO John Pence stated that most of the “heavy lifting” on cost infrastructure is now complete, implying that Asure anticipates a flatter cost structure in the coming quarters, allowing incremental revenue to contribute efficiently to the bottom line.
The company has been working to create a more unified client experience and expand its solution set. It has grown organically by cross-selling, upselling, expanding its product offerings, and converting resellers into direct customers. Meanwhile, strategic M&A activity helped drive inorganic growth. To support this strategy, Asure signed a new $60 million credit facility, drawing down $20 million in April to fund customer acquisition and product suite expansion.
Its AsurePay product has been gaining traction. It is an alternative digital banking solution that enables employees to access payroll advances, debit card functions, and no-fee ATMs through a mobile app. More than 70% of its active cardholders have used AsurePay more than three times per month, indicating early adoption success.
In the last 18 months, Asure has made 16 acquisitions, the majority of which were focused on acquiring customers. Management indicated strong pipeline activity and a clear intention to pursue value-added transactions that will improve its product capabilities or expand its customer base. Furthermore, its contracted revenue backlog increased 339% year on year to $82 million, indicating future revenue and supporting its optimistic 2025 outlook. Asure ended the quarter with cash and cash equivalents of $14.1 million and debt of $14.8 million.
Asure maintained its full-year revenue guidance for 2025 of $134 million to $138 million, representing double-digit growth. Adjusted EBITDA margin is expected to be between 23% and 24%. Analysts predict that the company’s revenue will grow by 13% in 2025, followed by a 9.3% increase in 2026. Analysts also expect the company to report a profit of $0.89 per share in 2025, rising 13.4% to $1.01 in 2026. Asure, trading at nine times forward earnings, is a reasonable growth stock to buy now.
Asure’s medium-term goal is to scale to $180 million to $200 million in annual revenue, with adjusted EBITDA margins of 30% or higher. Management is confident in the outlook, citing strong product performance, a healthy acquisition pipeline, and operational scalability.
Artificial intelligence (AI) is also emerging as a critical enabler. Asure and Amazon (AMZN) Web Services (AWS) collaborated in March to analyze customer behavior, optimize pipeline activity, and improve product development using AI-driven insights. Asure’s AI agent “Luna,” launched in collaboration with AWS, could become the industry’s first AI assistant for HR and payroll.
In May, Needham analyst Joshua Reilly reiterated his “Buy” rating on ASUR, citing the company’s strong first-quarter performance, with revenue exceeding guidance despite headwinds from lower HR Compliance revenue. Reilly believes the stock is undervalued and sees potential for accelerated growth through 2026 as revenue quality and product diversification improve, setting a price target of $20.
Overall, Asure stock has been rated a “Strong Buy” on Wall Street. Out of the nine analysts covering ASUR stock, eight have a “Strong Buy” ratings, while one recommends a “Moderate Buy.” Its mean target price is $14.33, which implies an upside potential of 32% from current levels. Plus, its high price estimate of $20 suggests that the stock could rise as high as 85% over the next 12 months.
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On the date of publication, Sushree Mohanty did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
