Opinions
Peter Hodson
Solium Capital Inc
SUM-T
COMMENT
Apr 04, 2013
Stock price when the opinion was issued
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Software as a service with a high recurring revenue model. Just reported their earnings and people were disappointed. They were down 29% year-over-year. Expanding into other markets. Earnings estimates have been revised downwards by about 4% in the last 90 days. PE is 28X for 2015 as opposed to 24X. Thinks the stock will mark time as people wait for coming quarters to see if there is any improvement.
He has a small Short position. It is really more of a quantitatively driven Short. Earnings estimates, on a go-forward basis, have shown negative momentum. Had a good run in Canada on benefit processing and things like that, and are trying to do the same in the US, which is a much more competitive marketplace. Thinks there is more risk to the name then upside.
Basically provide a lot of employee benefits, particularly with regards to stock options, etc. They advised they were expanding into Australia and the UK and that expenses would go up. Earnings are expected to grow from $.21 to $.28 however you already have a 26X PE. If they are successful, they will have a 12% ROE. 14% growth against a pretty high PE for next year is why the stock is marking time. Expects there will be a continuation of the sideways move for another 6-12 months.
(A Top Pick Jun 14/18, Up 59%) It is another example of an undervalued tech company in Canada. It was taken out by MS-N just over a month ago.
Has done a little bit of work on this but is not an expert on it as yet. Really likes what they are doing in terms of third-party pension administration. Companies are outsourcing all sorts of administrative issues. They don’t need a whole lot of capital, because it is a service business. Stock has done very well and the numbers have been rock solid. A little expensive, but investors are anticipating a wave of outsourcing going to this company.