Peter BriegerGEAC ComputerGAC.TOTOP PICKDec 10, 2003
Felt that the last quarter was very positive. Attrition in the existing business was slowing down dramatically. New businesses licensing has stepped up significantly. Getting costs under control. Undervalued.
Very interesting at these levels. Trading around 11 X earnings. Management has done a very good job. The markets they are involved in are growing. A free cash flow yield of about 10%.
Ranks 423 out of 700 in his quant model. Earnings estimates have been chopped 7% in the last 90 days and 12% in the last 60 days. Earnings growth year over year is down by 21%. Earnings are expected to drop from $0.87 in Apr/05 to $0.79 in '06. Looking out to '07, the forcast is for $0.81.
$0.75/0.80 is your base rate of earnings. If the street pays 15 X, that gets you to $12. They have about $2.25 in cash. In the event of a takeover, it's probably around $14/15.
Has had a good run and may be time to lock in your profits. Would have concerns on its growth trajectory. 50% of the business is services driven by software sales. If the software sales are not there, then the service revenue will eventually be hurt.