NetSol Technologies, Inc. (NTWK) is Significantly Undervalued at Today’s Prices
NetSol Technologies Inc. is a worldwide provider of global business services and enterprise application solutions. The company has a global footprint with operations in such diverse locations as San Francisco, Beijing, London, Adelaide, Riyadh and Bangkok. This broad physical base of operations is an example of NetSol’s corporate philosophy of seamless integration as exemplified by their core BestShoring practices, which are designed to eliminate the normal risks associated with outsourcing.
Netsol’s operating trends have moved nicely toward the positive and the company appears to be well positioned with its core product offerings as it expands into new international market opportunities. At the end of the last quarter, NetSol had $22 million in backlog which positions the company to show year-on-year growth and profitability. That backlog, together with the company’s expansion into the Asian markets, and their ability to provide customized, high-quality, cost-effective products and services, bodes very well for NetSol’s future.
The company is expecting revenue growth of between 25% and 32% for the current fiscal year with a return to GAAP net income. Underscoring this projection, Rodman & Renshaw recently raised their estimates from FY10 revenues of $31.5mm and FY11 revenues of $40.1mm to $33.6mm and $43.2mm, respectively. Another analyst following the company, Maxim, also foresees solid revenue growth with GAAP profitability.
Based on Rodman’s revised estimates and an intraday price of $1.03, shares are trading at 4.7x FY 2011 P/E, significantly below the peer group’s average of 14.5x. With a $2.50 Price Target from Rodman & Renshaw and a $2.00 Price Target from Maxim, NetSol Technologies currently offers an attractive value to investors.
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