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Perficient Inc. Message Board

  • riskspan riskspan Jan 5, 2009 5:52 PM Flag

    Most of the time Perficient gives back most of its

    gains. Perficient is at an inflection point of either it could be darling again or it could be in the $2 doldrums. All the indications are that it could start to trade higher. Following are the reasons:

    1. In Q3 Perficient cleaned its balancesheet and took AR bad debt provisions and also wrote off some of the registration expenses. So balance sheet is clean.
    2. In Q4 they repurchased stocks close to 2 Millions stocks. This reduced the float by 2 Millions and effectively reduced the denominator of EPS computation from 32 Millions to 30 Millions. This is about 6 % reduction in denominator and 6% increase in EPS at the current level of earnings. Depending on the PE multiples, this stock will raise because of the stock repurchase plan.
    3. Normal PE for IT services during tough time of 2008 was 12. For 2009 with increased growth and stimulus, it could be 18-20. On the conservative side if we have 16 as the PE multiple for our computation, we should be trading at at EPS 0.80*1.06 (due to stock repurchase) *1.25(conservative growth for 2009) * 16 PE multiples= $17 valuation. If the growth is more than 25% and if their earnings is more than the current level, Perficient should be trading at or around $16-19.

    Having said that , why this stock is still trading at less than $5. Because lack of guidance from the management. Management need to transparently educate the street where they are heading , their pipeline, profitability and their growth plans. Key here is growth. If they have 25% growth they will definitely enjoy PE multiples of 14 -16. Plus they also have additional stock repurchase authorized. This will definitely improve the stock purchase.

    Management need to deliver the following:

    1. Guiding q1 Growth at a minimum of around $65-70 Millions.
    2. Margin improvement by way of SG&A belt tightening.
    3. Partnership Announcements with some of the major competitors like IBM and also some of the software vendors.
    4. Increase in utilization rate and profitability.
    5. Increase in # of 500K deals and possibily some $1M above deals .

    Delivery of the above 5 points will put the stock to rally mode. Right now management assertion is that their stock is significantly undervalued and the smartest thing is to buyback its stock. Corollary is that managment's valuation will be around $15 or so. So it is 1/3 of its fair value. If Jack deliver his presentation as it is without any spin, this stock will be closer to mid teen level within 1-2 months.

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    • Riskspan, Thanks for the optimistic post. Very interesting too. I made the mistake of holding PRFT all the way down from high teens. I will continue to hold. I continue to "hope" all the moves the company has made in the last 6 months will pay off over the next few years. Good luck to all.

      • 2 Replies to MCROC43
      • Again Jack has disappointed us so much that we are in deep trouble now. I dont think they managed their business at all. Just two weeks ago they issued a statement that their stock is significantly undervalued when they authorized their additional stock repurchase plan. When they were expecting negative growth how can they complain that their stock is significantly undervalued. It was just two weeks ago.

        In my opinion there is something wrong somewhere. I think they are trying to low ball the street and beat them later. That is again a hope. Jack has serially disappointed us for most of last year. Again this SEC filing is another one.

      • Thanks for your post. I know that you have been believing in this company since teens. I saw your earlier postings.
        it would be lot more appropriate, if Perficient management determined to invest heavily in Sales and Marketing in bringing the right kind of people at the early stage of 2008 , they would be in a far more comfortable position than they are now.

        Perficient did the right thing of investing in sales team and also repurchasing their stock. They attracted some some sales folks in Q2-q3. The question is Where is the result. We must see a revenue target of $70 Million in Q1 09.
        I will be disappointed if Jack is mediocre with Q1 outlook. He has to raise the bar higher and should commit to beat that number. Street will rush to reward him. If his presentation is a me too and mediocre one, then he need not waste his time doing another one. He should just quit and focus on something that he can be good at.

        It is not right to complain that they are being significantly undervalued when they were shrinking and reporting lower eps and revenue. It would be stupid of street to value them higher. if they really mean that their stock is worth more, then they should report higher revenue with increased EPS.
        Current Q1 EPS is 0.15. This must be wrong. It should be more than 0.25. How can it be lesser than Q3 08 EPS? Did anyone in this board ever questioned why the estimates are way off? . Analysts dont want to raise because they dont have any quidance from management. They decided to leave it flat or lower. Just to be safe.
        Tomorrow they have an opportunity to jumpstart this stock. if Jack fails, he definitely and respectfully quit his job. That is good for his reputation and for the organization he cares. If he excited the street make the stock to move up. He will definitely be the hero of Perficient employees and its invetors.

        They should engage with Investment Bankers to explore alternatives to improve value.

 
PRFT
19.64+0.06(+0.31%)Jul 23 4:00 PMEDT

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