I think Cowan is being ultra conservative, first in ascribing a $0.61
EPS for CMND in FY 1999, and second in assigning a target stock
price of a crummy $24.00 a share based on a P/E of 40.
If you accept that CMND is a "mini" offshore Y2K body shop in the
mold of CBSL, IMRS, and SYNT, the future is much brighter, I assert.
Comparing the four (figures are $M unless otherwise noted):
CBSL IMRS SYNT CMND
Price (7 APR) $37.75 36.81 47.12 16.12
EPS (last FY) $0.35 0.52 0.39 0.06
P/E 108 71 121 269
P/S 6.6 7.6 9.9 2.7
# shares (M) 21.6 17.0 25.4 4.3
Mkt Cap ($M) 815 633 1,199 69
Sales (FY97) 123.8 83.5 124.3 25.1
Cash 54.6 64.0 22.3 20.0*
Curr Asst's 79.2 105.1 51.4 25.0*
Curr Liab's 12.4 15.5 18.6 4.9
LTD -0- 0.9 -0- -0-
Stkhldr's Equity 75.2 108.0 36.0 29.9*
* Adjusted following IPO sale of expected 2.1M shares at $11.00 a
share. Actual offering was 2.7M at $12.00, thus balance sheet is
fatter than shown for CMND.
As is evident, all four companies have enviable balance sheets --
little or no long-term debt, lots of cash, excellent asset-to-liability
ratios, etc.
There were some surprises for me. For example, I had no idea
SYNT's market capitalization was so high in relation to IMRS's, and
that its price-to-sales was 50% higher than CBSL's. I was also happy
to note the cheap valuations of CMND in terms of P/S and market
cap; i.e., it has a long way to grow.
Will it grow? Well, recent year-over-year revenue growth from FY 94
through FY 97 shows annual growth rates of 33%, 38%, and 47%,
respectively. In other words, sales growth rates are accelerating.
This compares to growth rates for the other three companies, FY96
to FY 97 of: CBSL, 33%; IMRS, 200%; and SYNT, 35%. Thus it's in
the ballpark with two of the big three.
With growth rates accelerating, balance sheet solid, a long and
outstanding client list, a successful offshore business model to
follow, positive EPS, & cheap P/S and market cap valuations, I think
CMND has a long, long way to run. Considering all of the above, I
find Cowan's projections of EPS and stock-price target in FY99 to
be excessively conservative.
With the numbers above as a starting point, I'd be interested in
reading FY98 and FY99 estimates from thread participants on sales,
EPS, and especially stock price. |
