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While looking through the list of top % gainers on the NASDAQ today, I cam across Ixia (XXIA), a stock that I hadn't heard of previously, and needless to stay a stock that I do not own any shares nor any options. As I am writing, this, Ixia (XXIA) is trading at $15.13, up $1.38 or 10.04% for the day in an otherwise very lackluster market.
According to the "Yahoo Profile" on XXIA, Ixia "...is a provider of multi-port traffic generation and performance analysis systems for the high-speed data communications market, including the Internet infrastructure and local, metropolitan and wide area networks." Well, since I am NOT a computer "geek" (excuse the term please), I cannot tell you on an intuitive level exactly what they do, but their numbers deserve a second look!
On October 21, 2004, XXIA announced 3rd quarter 2004 results. Net revenue for the third quarter ended September 30, 2004, increased 39% year-over-year and 12% sequentially from the prior quarter to $30.1 million. Net income on a GAAP basis for the quarter came in at $4.7 million or $.07/diluted share a 96% increase over the $2.4 million or $.04/diluted share for the third quarter in 2003.
How about longer-term? For this, as you probably already know, I like to turn to Morningstar. The Morningstar.com "5-Yr Restated" financials on XXIA show a slightly erratic revenue picture but basically, revenue has grown from $24 million in 1999 to $96 million in the trailing twelve months (TTM). Extrapolating the current quarter would get us to $120 million in revenue on an annualized basis.
Earnings have also been erratic increasing from $.16/share in 2001 to $.17/share in the trailing twelve months. Again, annualizing the latest quarter gets us to a $.28/year rate.
Free cash flow has remained positive with $20 million in free cash flow in 2001, and $15 million in free cash flow in the TTM.
The balance sheet as presented by Morningstar.com also looks solid with $78.5 million in cash and $34.0 million in other current assets. The cash alone would cover the $19.5 million and ZERO long-term debts about four times over!
What about "valuation" questions? Looking at the Yahoo "Key Statistics" on Ixia, we can see that this is a mid-cap stock with a market capitalization of $931.97 million. The trailing p/e is rich at 71.27, the forward p/e is a shy better at 35.14, and the PEG shows the valuation questions with a 2.54 number. Price/sales also steep at 8.09. This stock is not a bargain. (But that might not mean it isn't still a good investment!)
The company has 61.68 million shares outstanding with only 28.00 million that float. Of these, as of 11/8/04, there were 614,000 shares out short representing only 2.19% of the float and only 1.23 trading days of volume. There isn't a lot of short sellers on this stock.
Yahoo does not show any dividend and no stock splits are reported.
How about "technicals"? For this I like to review a Point and Figure Chart from Stockcharts.com:
Here we can see that this stock really has been trading somewhat sideways since mid 2001, when it ran into resistance in January, 2002, at around the $15 level, declined to $2.00 in October, 2002, and again hit a resistance level at around $15.50. The stock did not pull back quite as far, finding support at around $5.00 and now has been moving higher, possible to new heights, but again is now at the $15.00 level...but earnings are strong, and I suspect we will see continued price appreciation, market conditions supporting it, in the future.
What do I think? Well it is an interesting picture. A small high-tech stock with a great recent report, bucking the current day's market with a nice move to the upside. The valuation is a bit pricey, but then again, the stock is just going profitable and is growing both revenue and earnings strongly...so I defer to you whether that is a good enough growth picture to justify the price! The free cash flow is nice, the balance sheet is pristine, and technicals look fine to me. I kind of like this stock and would be a buyer in here if my own portfolio would allow me. I am close to a sale on VMSI, but will sit on my hands until I have a sale on a gain to allow me to add a new position!
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