Black Knight, Inc. is a leading provider of mortgage processing and technology solutions to the US mortgage industry. Over 60% of all first lien loans are processed using BKI’s technology. BKI servicing revenue is very stable with long term contracts. Also, BKI sells software facilitating loan originations and sells data and analytics services to the mortgage industry.
Today, we increased our holdings of BKI to a 2% position with a price target: $55.00. Please see attached presentation.
Thesis
• Black Knight is an industry leader with over 70% of the mortgage servicing industry using their software.
• Stable business with 80% recurring revenues related to the number of outstanding mortgages serviced
• BKI has high returns on capital and high cashflow margins
• We expect high single digit revenue growth and double digit EBITDA growth.
Valuation (the chart I showed this morning was for the old shares)
2018 P/E 27.3
2018 cashflow yield 8.3%
Please let me know if you have any questions.
Thanks,
John