By: sfgoodfella $$$
Reply To: None Wednesday, 25 Apr 2001 at 3:57 AM EDT
Post # of 11441
PRSF Trading Below Intrinsic Value ...
PRSF is trading below its intrinsic value. People should not be selling this stock below $12.50 based on CURRENT valuation.
F2001 $0.13
F2002 $0.14
F2003 $0.29
Using a PEG ratio of 1.5, PRSF should be priced at $10.37.
Now, assume you find analyst numbers too conservative. I do because (1) they are at the bottom of mgmt guidance of $0.14 to $0.20 (2) PRSF has lots of good news that shows they should AT LEAST meet guidance this year (see my PPP postings) and (3) EPS increase of only $0.01 on revenue increase of $92 mm (mgmt guidance $360mm less F2001 revs of $268 mm) or 34% seems too conservative.
Management provided guidance of EPS of $0.14 to $0.20 this year. So ... lets do a little sensitivity analysis. Here is a table with EPS increments of $0.01 for mgmt guidance range. F2003 is assumed to increase by the same EPS magnitude as does F2002. Results for 1.5 PEG values is as follows:
F2001 $0.13__$0.13__$0.13__$0.13__$0.13__$0.13__$0.13
F2002 $0.14__$0.15__$0.16__$0.17__$0.18__$0.19__$0.20
F2003 $0.29__$0.30__$0.31__$0.32__$0.33__$0.34__$0.35
Price $10.37_$11.68_$13.06_$14.51_$16.02_$17.59_$19.22
PRSF consensus EPS for 1Q is $0.01. So if PRSF beats 1Q estimates by $0.01, it will be tracking at $11.68, if PRSF beats 1Q estimates by $0.02, it will be tracking at $13.06 etc ... If PRSF just meets estimates, it is still tracking over 25% higher then what you can buy it for now. CONCLUSION: Undervalued.
Where is PRSF going? Well, lets take a look. At the end of the fiscal year (1-31-02), if PRSF makes its $0.20 top end of management guidance, then we have EPS outlook as follows (assume 50% growth rate for F2004 which is 17% less than F2003 growth rate):
F2002 $0.20
F2003 $0.35
F2004 $0.53
Price $32.56
Therefore, under this scenario, where PRSF meets top end management guidance and continues to track at the same or slightly diminished operating level, your target PRSF stock price for EOY should be over $32 dollar. Conclusion: PRSF is undervalued.
Upside? PRSF has a lot of growth ops available to it. The company is billing multiple technologies all across the planet, selling and partnering with the largest and leading companies in the world. PRSF has built a platform portfolio (PPP) that provides numerous growth opportunities, and diversification from economic risks and geographic risks. PPP generates core growth from its customers' user growth under PRSF's subscription revenue model, new customers and thanks to PRSF modular software technology, new services. |
