Actually, I believe the market cap is more like $570MM, not $460MM, and based upon current run rate of $40MM/qtr, more like 3.5, not 2X sales.
3.5X sales is about right, maybe even generous, for a company not growing and not profitable. I would be happy to list a number of software companies that are selling for 1X sales. Some are also enterprise apps (INFR, ROSS, for example).
>>a software company with Gross Margins better than 60% is a SCREAMING buy.
Pretty much all enterprise software companies have big gross margins.
I think that the stock is priced right in the low 20's. It was ridiculously overpriced before. If MANU executes, the stock will move. RIght now, you'll likely see a trading range of 20 - 23 for three months - until next quarter. The only thing that would affect this significantly are a pre-announcement of more poor results (stock will see 10) or some sort of acquisition of them. And, I seriously doubt that management would entertain an acquisition offer at any reasonable premium over the current price. Even a premium of 50% would only bring about 33 - and they've tasted 66.
So - watch for this to drop more (there were some folk looking for dead cat bounce today), maybe to 18 - 19. Then maybe pick some up to trade to 23. |
