Howard,
I good analysis. As a general rule, I think companies earn P/E ratios based on consistent performance and sustained growth rates, both in earnings and revenues. NTST does not have a history of sustained revenue growth rates, going back a couple of years you can see their revenues were at the same level they are today. The earning trend does look good, as you noted. If this company can continue to add new customers, and increase revenues from existing ones, they could command a P/E equal to their growth rate. If you go back and look at their news releases for the last 2 years, it is apparent they are becoming quite successful selling to new state agencies. Don't see too much about private sector.
These guys look like they are going to be staying in business, so the downside risk is minimized. Some funny stuff went on last week with the price of the stock, and I would be careful monday, as the price could fall. If however, someone wants to buy the company ( and I think they are an attractive acquisition for someone) this stock would command a premium.
My biggest question, though, is can NTST sustain revenue growth? I know they can be profitable, but can they keep revenues coming in? |
