Hello Friends! Thanks so much for stopping by and visiting my blog, Stock Picks Bob's Advice. As always, please remember that I am an amateur investor, so please remember to consult with your professional investment advisors prior to making any investment decisions based on information on this website.
This afternoon, after selling a 1/6th of my holding in Precision Castparts (PCP), I had the opportunity of buying another position. As I like to do, I went to the top % gainers list to see if there were any stocks there that met my criteria for investing. There I found Concur Technologies (CNQR) which closed at $17.42, up $2.37 or 15.75% on the day. I purchased 240 shares of CNQR at a price of $17.40, shortly before the close of trading.
As I promised earlier today, let's take a look at this company and I think I can show you why it belongs on this blog and why I chose to take a position in this stock!
What exactly does this company do?
According to the Yahoo "Profile" on Concur, the company
"...provides business services and software solutions that automate corporate travel and expense management processes in the United States. Its flagship services include Concur Expense, an expense reporting solution that provides the process and information for management to reduce manual processing, improve internal controls, increase business policy compliance, speed up reimbursement, and increase expense report accuracy; and Cliqbook Travel, which enables customers to provide online corporate travel booking capabilities to its employees and enables customers to search for travel data from multiple sources, as well as delivers online booking, reporting, and agency support."
How did they do in the latest quarter?
Yesterday, after the close of trading, Concur (CNQR) announced first quarter 2007 results for the quarter ended December 31, 2006. Total revenue for the quarter climbed 52% from last year's results to $29.2 million from $19.3 million last year. This was also a sequential increase of 6% from the previous quarter. Net income was $1.0 million, or $.02/share, compared to net income of $.6 million or $.02/diluted share in the year ago quarter. This year's quarter included a provision for income taxes of $1.4 million, compared to no provision for taxes in the prior year. However, in general I prefer to see increasing earnings regardless of the reason, and might not have purchased this stock if I was more critical at the time of my purchase!
The company beat expectations for revenue, with analysts expecting revenue of $27.5 million and missed estimates for earnings with the $.02 reported, when analysts were expecting $.05/share. In the same article the company is reported to guide analysts to $29.5 million in the upcoming quarter and $.02/share in earnings. Total 2007 results is expected to be revenue of $121 to $125 million and earnings of $.10/share. Again, looking closely, this stock is not a perfect match for my strategy of increasing revenue and earnings.
What about longer-term results?
Checking the Morningstar.com "5-Yr Restated" financials on CNQR, we can see that revenue has steadily increased from $45 million in 2002 to $97 million in 2006. Earnings, which were at a loss of $(.46)/share in 2002, turned profitable at $.03/share in 2003 and have steadily increased since them to $.87/share in 2006.
The company has also increased the number of shares outstanding from 27 million in 2002 to 36 million in the TTM, while revenue was up 100%, shares outstanding increased by only 33%.
Free cash flow has been erratic but positive recently at $1 million, up from a $(3) million in 2005.
The balance sheet is adequate with $16.3 million in cash and $32.7 million in other current assets. This easily covers the $39.4 million in current liabilities which works out to a current ratio of 1.24. In addition, the company has $24.6 million in long-term liabilities.
How about some valuation numbers on this stock?
Checking Yahoo "Key Statistics" on CNQR, we can see that this is a small cap stock with a market capitalization of $545.97 million. The trailing p/e is a reasonable 19.98, with a forward p/e of 42.49.
Using the Fidelity.com eresearch website for more information, we find that the Price/Sales (TTM) works out to a modest 5.47 compared to the industry average of 5.74. This company reported a Return on Equity (TTM) of 40.22% compared to an industry average of 21.27%.
Finishing up with Yahoo, we find that there are 36.21 million shares outstanding and 32.47 million that float. Currently there are 5.12 million shares out short as of 1/9/07. Currently there are 5.12 million shares out short which is 14.70% of the float or 10.4 trading days of volume. Today's sharp move higher on relatively unimpressive earnings, suggests the possibility that the 10.4 trading days of volume (the short interest), might well be at work with a 'squeeze' of the short sellers.
No dividend and no stock split is reported on Yahoo.
What does the chart look like?
Looking at the "Point & Figure" chart on Concur from StockCharts.com we can see a fairly strong price performance from a low of $1.50 in September, 2002, to a high of $19.00 in March, 2006. Since then the stock pulled back to $12 only to resume its upward march.
Summary: What do I think?
To tell you the truth (lol), I think if I had looked at this one closely, I might have passed on this purchase. I don't like flat earnings, I don't like that the next 12 months will have earnings under the prior year's results. Otherwise the numbers are supportive of the purchase. I shall have to watch this one relatively closely and sell it if the price performance is under question. Otherwise the chart appears strong.
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