RAP, thanks for the quick respsone. You asked about Clarify.
You're right that Clarify's PE at 27 is one of the lowest in the group. However, since their earnings annual rate of growth from actual FY96 to estimated FY98 is 20%, I still think the stock is a little overvalued and at the least is fairly valued.
One could argue that a PE of 27 is low considering First Call's 5-year growth rate of 50%. The snag for me is that of the five brokers covering the stock at First Call only one is going out on a limb to make a 5-year projection. So I don't take it very seriously.
CLFY also has a relatively low (compared to the industry) PSR of 3.7. If you look at the trailing earnings and notice the 14% profit margins, you might get the impression that it's a relatively low PSR for such good margins. But there is a red flag becauise Q1 margins for this year slipped -- or I should say, plummeted -- to 10%.
It has a strong balance sheet, and I especially like the strong working capital and cash as a percentage of the stock's price. I can't remember but I believe it is generating positive cash flow from operations, a biggie for me. One can't dismiss that it is the second largest of the bunch based on its $67 million in sales.
On a more qualitative basis, CLFY has a long list of marquee customers (but so do all of its competitors.) For the other readers who aren't aware, its strategy is to offer a comprehensive range of front office software. In addition, it has a special module targeting the telecommunications industry (as does Scopus.)
Just this month CLFY decided to integrate Actuate's active reporting software with its own, allowing easier and faster generating of custom reports that will work across private networks, Intranets and Extranets . For those who don't want to start from scratch designing the reports, Clarify will also be selling template reports for $5000 each..
Also this month, Clarify teamed up with CrossRoads, using their software to make it easy for customers to "connect" Clarify's front office applications with the customers' back office applications. Don't get too overwhelmed with that as a competitive edge, though, because that is one of the trends all the leading companies will surely adopt. In fact, CrossRoads is providing their software to some of Clarify's competitors.
Your thoughts? |
