It’s been a troublesome journey for Enghouse Techniques (TSX:ENGH). As soon as a quiet favorite amongst revenue traders, the corporate’s share value has tumbled during the last 12 months. Whereas many others chased scorching synthetic intelligence (AI) shares or unstable development bets, this software program agency fell out of favour, at the moment buying and selling practically 37% from its 52-week highs.

However we shouldn’t overlook the truth that this firm continues to be worthwhile and nonetheless pays a wholesome dividend. And extra importantly, it nonetheless builds important software program utilized in every part from video communications to transit and healthcare techniques. Whereas Enghouse won’t be some of the in style Canadian tech shares as we speak, it retains exhibiting its strengths quarter after quarter with reliable outcomes. On this article, I’ll stroll you thru why Enghouse inventory could also be undervalued proper now and why affected person traders would possibly nonetheless profit.

Enghouse Techniques inventory

In the event you don’t comprehend it already, Enghouse is a Markham-based enterprise software program agency that operates via two key segments – Interactive Administration Group (IMG) and Asset Administration Group (AMG). It primarily presents specialised options for contact centres, video communications, telecom networks, public security, and even healthcare techniques.

On the time of writing, Enghouse shares are buying and selling at $21.79 apiece, giving it a market cap of round $1.2 billion. Extra importantly for revenue traders, it at the moment presents an annualized dividend yield of 5.5%, paid out quarterly. That dividend is being maintained even because the inventory trades close to its multi-year lows.

Understanding the slide in share value

Like many mid-cap tech shares, Enghouse has struggled with investor sentiment over the previous 12 months. As pleasure constructed round AI and fast-scaling platforms, extra conventional software program suppliers like Enghouse acquired left behind.

In 2025 alone, ENGH inventory has misplaced practically 32% of its worth. Nonetheless, this tech firm has remained worthwhile via this era and continues to report secure working money flows.

Newest monetary outcomes present ongoing power

Within the third quarter (resulted in July) of its fiscal 12 months 2025, Enghouse posted $125.6 million in income, barely down from $130.5 million a 12 months earlier. On the brighter aspect, recurring income made up a wholesome 69.9% of the full, underlining the stickiness of its enterprise.

The corporate’s adjusted quarterly earnings dipped as a result of a softer prime line and $3 million in particular expenses associated to value optimization and acquisition restructuring. Nonetheless, Enghouse delivered quarterly internet revenue of $17.2 million and adjusted EBITDA (earnings earlier than curiosity, taxes, depreciation, and amortization) of $32.3 million, with a stable margin of 25.7%.

Sure, these numbers had been decrease than final 12 months, however there’s context. The corporate is proactively realigning its operations, which has impacted its short-term profitability. And going ahead, Enghouse plans to guard margins.

In the meantime, its money circulate additionally stays wholesome. Notably, Enghouse ended the quarter with $271.6 million in money and short-term investments, and extra importantly, no exterior debt. That offers it stable flexibility to climate volatility and make opportunistic acquisitions.

Nonetheless investing for the long run

Even because it faces a difficult atmosphere, Enghouse is sticking to disciplined capital administration and constant growth. Its two-pronged development strategy focuses on natural product growth and selective acquisitions.

Additionally, Enghouse’s recurring income base, stable margins, and secure money circulate give it the reliability income-focused traders normally search for. And at as we speak’s beaten-down valuation, it doesn’t must put up huge development to regain investor confidence, I consider. Even modest restoration, paired with its secure dividend, may reward long-term traders in the event that they’re keen to be affected person.