CKSG is going to fly
Internet Marketers:
Think New Ideas Vs. CKS Group
By Steve Harmon
Senior Investment Analyst
Internet.com
"Where Wall Street Meets The Web"
While investors have seemingly done nothing but Think New Ideas
NASDAQ:THNK - news) of late, we wonder if they've done any real
thought at all? Rival Web marketer CKS Group
(NASDAQ:CKSG - news) trades at what looks like a substantial discount,
THNK's price-to-earnings of 123 vs. CKSG's 33 basis by our estimates.
In the furor of trying to find the "next big ad or marketing" Internet
stock THNK has run from under $10 to more than $30 in barely a month.
Meanwhile, recall that CKSG, which traded at more than $45 six months
ago, still hasn't fully recovered from the haircut it took back in
November--CKS plunged under heavy 'G' force more than 60% in one
day--to about $14 per share amid weak earnings.
Given that thorough flogging it's no wonder that Wall Street's once
bitten, twice shy about CKS. But with all the interest in
THNK and Internet ad firm Doubleclick (NASDAQ:DCLK - news) , perhaps
it's time to look at the numbers:
Internet Stock Report Spotlight: THNK Vs. CKSG
Think New Ideas CKS Group Percent
(NASDAQ:THNK - news) (NASDAQ:CKSG - news) Difference
latest quarter data as of 12/31/97 as of 3/1/98 CKSG vs. THNK
Diluted shares outstanding 8.29 16.00 93%
Share price April 6 $ 29.44 $ 21.38 -27%
= Market capitalization $ 244.16 $ 342.02 40%
Current assets $ 26.82 $ 86.79 224%
- Current liabilities $ 19.40 $ 36.58 89%
= Working capital $ 7.42 $ 50.21 577%
Enterprise value $ 236.74 $ 291.81 23%
Revenue for latest quarter $ 10.07 $ 32.19 220%
Net income $ 0.47 $ 1.11 134%
Basic EPS $ 0.07 $ 0.07 0%
Annualized revenue at latest Q $ 40.27 $ 128.76 220%
Forecast fiscal EPS $ 0.24 $ 0.65 171%
Multiples
Market cap/Revenue 6 3 -56%
Price/Earnings 123 33 -73%
all figures in millions, except share price and multiples
For the latest reported quarters CKS appears to have reasonable
revenue and earnings although note that 25% are from new
media. Meanwhile, Think just agreed to acquire Seattle's
Herring/Newman for $3 million, $400k of which was in cash and the
rest in THNK shares.
Herring/Newman is an integrated marketing outfit with $55 million in
billings, clients include Hewlett-Packard and Westin
Hotels. We don't show pro forma shares or include this in the
estimates above.
Perhaps the acquisition provides some insight into why investors fuel
THNK--it's on the hunt, rolling up leading new media/Internet era
marketing firms aggressively. It builds web sites for such well-known
firms as Oracle and IBM. Also helping THNK's rise was a tout from
Volpe April 1 with "strong buy."
But our analysis shows that CKS simply may be downbeaten and it's
own blue chip clients forgotten. CKS clients include:
Excite (NASDAQ:XCIT - news) , Apple (NASDAQ:AAPL - news) , McDonald's,
Internet Shopping Network, Pixar, and Starwave. Perhaps worth a
thought?
Blip us with an e-mail to stocktalk@iworld.com on what you think about
any Internet stock or investment you've seen or heard about to. Send
us your rants, raves or ramblings and they may be included in this
column in a special feedback edition every week. Throughout the
trading day be sure to check Internet Stock Report's index of leading
Web companies, the ISDEX, Internet Stock Index, for a roundup of how
Internet stocks fare minute to minute. |
