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Tangoe, Inc. Message Board

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  • crkenmore crkenmore Aug 29, 2012 4:12 PM Flag

    ***TNGO you have no edge****

    For a Technology growth company I believe that PEG is one of the better numbers to use. Yahoo Finance projects 1.11, a very reasonable PEG level compared to 3.61 for CRM. As you are aware Wall Street rewards growth with a higher premium than steady Eddie's. PEG captures the value of growth better than PE. There is no absolute price where I would find TNGO unattractive. If they continue to execute through accretive acquisitions, and higher margin/predictability recurring revenue business their ( P ) share price may rise but this may be offset by (G). I am comfortable until the PEG until 1.6, with the yellow caution sign turning red as it approaches 2.0

    Effectively TNGO is investing their high gross margins in revenue growth, rather than Net Income/EBITDA. This is essentially a similar strategy employed by CRM along with M&A, and converting as many customers as possible to recurring revenue subscriptions.TNGO and CRM are not in the same business, but both provide software based products and services to Enterprises and Carriers.

    Add one more factor to consider. Enterprises are increasingly accommodating explosive growth from employee owned 802.11xx Smart phones/IPADS that are visitors with permission on corporate LAN's. This powerful trend add management, security, and control issues for corporate customers and significantly expands TNGO's addressable market.

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    • that's a nice pitch but it doesn't matter this company is not worth 30x EBITDA no matter how long you are...15x max = stock cut in 1/2

      • 1 Reply to vpg999
      • Valuation and the selection of measurements used for valuation purposes are always an individual decision. Clearly, you believe that TNGO's share price is excessive by 2X. It is unlikely that you have or would counsel an investment at today's $17.20 price except as a short. Your opinion is valuable and should be respected.

        Far more important to the companies market capitalization than your view or mine, is the sentiment of the institutional investors, who hold 2/3 of TNGO shares. Most of TNGO's share holders including, Lord Abbett, Wells Fargo, Vanguard, Wellington, and Wasatch are all high quality, "buy and grow" institutions. TNGO's 3% share price increase today, rather than continuing yesterday's 17% decline, suggests that these large investors have concluded that absent no new information non-public, they are not liquidating their positions. They likely have concluded that 27X forward PE and more importantly 1.11 X forward PEG is attractive for a company growing at 39.20% YOY quarterly revenue growth. This criteria is not at all atypical for a company at TNGO's early stage of development. Many companies have had higher PE's at a larger size.

        I believe that an equally relevant question is when and if the shorts conclude that the bear attack on TNGO is not succeeding and by covering their short positions will cause the stock to pop higher? The shorts are frequently less patient than the longs, unless the fundamentals of the company, market, or exogenous environment adversely change.

        To date, the shorts have provided no new information not already in the public domain, and baked into the Research Analysts and institutional investors' models.

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