Chester, I agree that I would rather not pay dividends.
Here are answers to the rest of your questions:
Re. growth rates and margins: Both TSS and FDC have a 17% net margin.
Here are the rev & eps performances, from which I will extract below
the growth rates:
TSS:
REVENUES (Thousands of U.S. Dollars)
QUARTERS 1993 1994 1995 1996
MAR 35,576 40,977 53,380 71,102
JUN 36,517 44,836 59,134 74,489
SEP 38,789 47,938 66,108 80,179
DEC 41,192 53,820 71,086 85,878*
TOTAL 152,074 187,571 249,708 311,648*
EARNINGS PER SHARE
MAR 0.030 0.035 0.040 0.050
JUN 0.038 0.040 0.045 0.060
SEP 0.040 0.045 0.055 0.090
DEC 0.050 0.055 0.075 0.110*
TOTAL 0.158 0.175 0.215 0.310*
FDC:
REVENUES (Thousands of U.S. Dollars)
QUARTERS 1993 1994 1995 1996
MAR 695,254 668,200 903,400 1,129,700
JUN 818,104 726,600 1,092,500 1,200,400
SEP 824,274 761,600 1,071,200 1,258,400
DEC 912,311 924,100 1,119,100 1,349,600*
TOTAL 3,249,943 3,080,500 4,186,200 4,938,100*
EARNINGS PER SHARE
MAR 0.140 0.170 0.195 0.230
JUN 0.165 0.190 0.225 0.300
SEP 0.185 0.220 0.270 0.360
DEC 0.310 0.280 -0.875 0.480*
TOTAL 0.800 0.860 -0.185 1.370*
Looking at sequential revenue growth rates (quarter to quarter), they
aren't much different. TSS shows a little more growth, but not enough
to account for a four-fold richer valuation. Below are the ratios of
revenues each quarter compared to the revenues the quar
TSS FDC
1.07 1.07 Dec. 96 / Sep 96
1.08 1.05 Sep 96 / June 96
1.05 1.06 June 96 / Mar 96
1.00 1.01
1.17 1.04
1.12 1.04
1.11 1.21
0.99 0.98
1.12 1.21
1.07 1.05
1.09 1.09
Now here are the year-to-year revenue growths:
TSS FDC
1.25 1.18 1996 / 1995
1.33 1.36 1995 / 1994
1.23 0.95 1994 / 1993
As far as what Wall Street thinks, here are the analyst opinions:
TSS:
Current Ratings:
Strong Buy (1) 0
Moderate Buy (2) 1
Hold (3) 4
Moderate Sell (4) 0
Strong Sell (5) 1
Mean Rating (1 to 5 scale) = 3.2
NEXT 5 YR GRTH (%) 23.80
FDC:
Current Ratings:
Strong Buy (1) 9
Moderate Buy (2) 7
Hold (3) 1
Moderate Sell (4) 0
Strong Sell (5) 0
Mean Rating (1 to 5 scale) = 1.5
NEXT 5 YR GRTH (%) 20.04
All in all, TSS shows nice growth. But not enough to justify a p/e
of 110 on trailing earnings IMHO.
A further indication TSS is overvalued is that TSS is 80% owned by
another company, Synovus, and both have the same market caps, so the
market isn't valuing all the banks etc. that are also owned by SNV
as worth anything. SNV has a p/e of 31, TSS of 110.
I'll take a look at STAR. QDIN, by the way, has a very good asset in
its Brueggers Bagel chain. I eat at one several times a week. It has
lots of sales. |
