The software companies on our list could be undervalued compared to its peer
SmallCapPower | October 19, 2016: When valuing the growth potential of a particular company, and specifically small cap companies that may not have positive income, one metric that is useful for finding undervalued stocks is the price to revenue multiple. This is found by taking the total revenue of the company and dividing it by its market value, or it can be done on a per-share basis. A company’s current stock price could be seen as discounted if its price to revenue multiple is under its peer average, which could be brought about in a growth stock by certain setbacks but can signal that the company’s value is poised to rise. For the stocks on our list today, they all have a price to revenue multiple below their peer average of 4.35x, based on 12 different enterprise software providers, and although they have already seen strong growth this year could be positioned for more.
Intrinsyc Technologies Corp. (TSE:ITC) – $1.82
Intrinsyc Technologies Corporation Intrinsyc Technologies Corporation is a product developer and provides software, engineering services, and integrated solutions. The Company provides solutions for the development and production of mobile, embedded and the Internet of Things (IoT) devices with software solutions for Java or Component Object Model (COM) enterprise interoperability. It operates through three segments: Embedded Solutions, which includes its computer modules and development kits, engineering services related to these modules and kits, and distribution of cellular communication modules; General Engineering Services, which includes RapidRIL telephony software, iDevice Manager and other enabling technology, testing tools, and hardware reference designs and platforms, and Other Software Solutions, including software licenses, implementation and other related services, maintenance and support attributable to its J-Integra Enterprise Interoperability Software, and Destinator software product offerings.
- Market Cap: $38.36 (mm)
- Total Revenue (LTM, CAD): $21.87 (mm)
- YTD Price PCT Change: 104.5%
- Price To Sales Per Share (Daily Time Series Ratio): 1.77
Tecsys Inc. (TSE:TCS) – $9.50
TECSYS Inc. is engaged in the development, marketing and sale of enterprise-wide supply chain management software for distribution, warehousing, transportation logistics and point-of-use. The Company also provides related consulting, education and support services. Its Supply Chain Platform with Visual Content is a technology for optimizing warehouse management operations. It offers various services, such as project management, customer support, training and technical services. The Company also offers Supply Chain Modeling And Reference Tools (SMART), which is a supply chain knowledge product.
- Market Cap: $117.00 (mm)
- Total Revenue (LTM, CAD): $68.63 (mm)
- YTD Price PCT Change: 28.9%
- Price To Sales Per Share (Daily Time Series Ratio): 1.70
NeuLion Inc. (TSE:NLN) – $0.93
NeuLion, Inc. is a provider of enterprise digital video solutions. The Company’s solution, the NeuLion Digital Platform, is a Cloud-based, fully integrated solution that allows the delivery and monetization of digital video content. The NeuLion Digital Platform offers content owners and rightsholders a suite of digital technologies, together with services for back-end content preparation, management, delivery and monetization, in an end-to-end solution. The Company’s solution suite also includes its DivX video solution that allows consumer electronics (CE) manufacturers to provide a video experience and premium screen resolution, till Ultra High-Definition (HD)/4K, across virtually all content formats, for a range of connected devices.
- Market Cap: $261.98 (mm)
- Total Revenue (LTM, CAD): $132.95 (mm)
- YTD Price PCT Change: 24.0%
- Price To Sales Per Share (Daily Time Series Ratio): 1.99