First the numbers since the website no longer provides
| pro | ||
| + | Operating Income After Depreciation | 13.93 |
| - | Minority Interest - Income Account | - |
| = | Income for Calculation | 13.93 |
| Market Cap Yahoo | 110,210 | |
| Share Price | 4.29 | |
| + | Market Cap Calc | 110.21 |
| + | Preferred Capital | - |
| + | Debt in Current Liabilities | - |
| + | Long-Term Debt | - |
| Cash and Short-Term Investments | 51.98 | |
| - | Excess Cash | 42.34 |
| = | Enterprise Value | 67.87 |
| + | Property Plant and Equipment - Net | 2.90 |
| + | Receivables | 16.18 |
| + | Inventories | - |
| + | Other Current Assests | 3.24 |
| + | Working Cash | 9.64 |
| - | Accounts Payable | 1.09 |
| - | Current Liabilities - Other | 27.97 |
| = | Invested Capital | 2.90 |
| Earnings Yield | 21% | |
| ROIC | 480% |
Clearly very good, of course they would not make the top 30 unless they were good. Let us dig behnind the numbers. Hmm, revenues are steadily increasing, always a good sign. They actually did ok in the 4th quarter as the economy fell off a cliff. Operating income is also very steady, between $3.5 and $4.0m each quarter. They have grown cash from $44m to $52m in past year, positive cash flow is also good. No debt and book value grew about 30% in 2008.
Certainly no obviously holes. Let us see how they make their money and what their management are saying. Wow, they dropped 12% on Friday, but on relatively low volume. They are a software company that helps companies determine optimal pricing. Pretty cool, I like the software companies (I own CKSW, DBTK and VSNT). They hold $2 in cash versus their $4.29 share price.
Reading their recent earnings report, they seem to expect revenues to drop about 10%. Probably not unrealistic given the economy.
I think I'll have to put PRO on close watch. $4.29 seems darned reasonable.
In stock news, KHD was down about 21% for me on Friday. It was pretty depressing, they had a lot of cancellations and to make it worse it seems their contract language wasn't very tight.
"The unexpected and sudden project terminations exposed a weakness in certain contract terms and credit insurance instruments relating to some of our customer contracts. We are amending our processes and procedures to remedy those weaknesses.
Yikes! Talk about bolting the door after the horse has escaped.
CSKI will report earnings on Monday evening. I have extremely high expectations, I hope I am not disappointed. I have a lot of CSKI, so we'll see if I am drinking champagne or tap water tomorrow night.
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2 comments:
I took a look at the company just now myself. After taking a very quick look at their income statement and balance sheet, it sorta looks like they may have been a growth company whose earnings plateaued, causing the drop in share price. Part of that may be attributable to what looks to me like an end to some tax loss carry overs. Their tax rate in 2007 and prior was way low, but back to a normal level for 2008 (which explains kind of well the drop in earnings despite higher revenue and operating income.
Unlike you, I worry a little bit about the future of such a company. Yes it has decent cash, but do they have much of a moat? Is there a lot of room for them to expand their software? Any competition? Who knows how great a steward they will be with that cash? Take away the cash, and the company's TTM price to earnings is a little under 6. Pretty cheap, but maybe not extraordinarily so given that they've already forecast a 10% drop in revenue. If their operating income for 2009 drops back down to their 2007 level (not an unrealistic assumption) and they have no more tax loss carry overs, their earnings might be more in the range of $8M, or around $0.33/share, which would give them a PE (exclusing cash) of 13 -- decidedly NOT crazy cheap in this market.
Thanks for keeping up this blog Marsh.
PS I'm supposed to be doing something for work so shouldn't be reading and posting here, but...I forget, does the formula account for R&D costs? I ask because PRO had $20M+ in R&D costs last year, and very high costs in previous years. I like companies that are trying to stay ahead, but if that cost is not accounted for in any way in the formula, then the ROIC number is kinda BS, don't you think? After all, the company doesn't *really* use ony $2.9M each year in "invested capital" right?
(I know, I know, your answer should be "the formula is what the formula is, and "invested capital" is how it is defined in the formula but still, if R&D is not accounted for, then the formula is kinda fishy for PRO)
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