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Technology Stocks : CheckFree (CKFR)
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To: Ann Janssen who wrote (106)3/19/1997 7:24:00 PM
From: kolo55   of 8545
 
CheckFree dropped again today. I decided to recheck fundamentals.

I tried to check the expected Price/Sales ratio for the next 12 month period. Since Checkfree expects to increase subcribers by 50% to 1.8M by June, and since the company did about $38M revenues in the last quarter, the company should do at least $58M in the Sep Q. Continuing this growth for another quarter will result in $220M for calendar year 1997. The current market cap is now about $660M, so the forward PSR = 3.0 . This isn't too bad for a company growing revenues over 100% annually, especially one building a franchise business that could lock up a market for a long time to come.

The key is to see good revenue growth in the current quarter. I suspect some of the weakness in the stock price is based on perceptions that new accounts are increasing slower than anticipated. Their penetration of the 140 million accounts in the banks Checkfree has signed up may be happening slower than expected. In order to hit $220M revenues for the 1997 calendar year, they need about 15% revenue growth each quarter. So the next quarterly report should show revenues of about $44M versus $38M last quarter. They probably won't hit this number, but if they do, or exceed it, we should see a nice move.

Well this is my attempt to guestimate some fundamental numbers on this stock. I hope Checkfree is busy getting new customers on-line, because that is the key now.

Paul
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