The hottest stocks on Wall Street are about to become companies with technology to deliver any type of video, over any type of network, to any IP-connected device. Harmonic (HLIT) rose to a new 52-week high Tuesday of $6.02 and in the evening reported a non-GAAP EPS loss of -$0.02 down $0.05 from a non-GAAP EPS profit of $0.03 last year. HLIT's trailing 12 month non-GAAP EPS fell from $0.25 to $0.20 and the stock after hours was at $5.89 and trading with a P/E of 29.45.
HLIT's non-GAAP EPS declined $0.05 year-over-year, but their main rival Concurrent (CCUR) reports on April 23rd and they are estimated to report GAAP EPS of $0.09 and non-GAAP EPS of $0.13 vs. GAAP EPS of $0.04 and non-GAAP EPS of $0.08 in 2012. CCUR's trailing 12 month non-GAAP EPS will likely increase by $0.05 from $0.35 up to $0.40 to double the trailing EPS of HLIT! CCUR closed Tuesday at only $6.77 and with HLIT trading for $5.89 after hours on Tuesday, CCUR could soon be trading for $11.78 per share!
CCUR only has 8.72mm o/s for a market cap of $59.03mm with $24.6mm in cash, no debt, and an enterprise value of only $34.43mm or just 0.55X its trailing 12 month revenue of $62.59mm. CCUR has incredibly huge gross margins of 58.81%, which are 30.69% higher than HLIT's margins of 45%. HLIT currently has an enterprise value/revenue ratio of 0.93. CCUR clearly deserves a multiple that is 30.69% higher than HLIT's enterprise value/revenue ratio, which would give CCUR a ratio of 1.22 and value CCUR at $11.58 per share!
HLIT recently sold their cable access business for $46mm. It was breaking even with $52.9mm in revenue and had low gross margins of 30%, yet it still sold for 0.87X revenue! CCUR's gross margins are nearly double and CCUR is about to report their 5th straight quarter of profits yet has an extremely low enterprise value/revenue ratio of 0.55! There is no way that CCUR should have an enterprise value/revenue ratio of below 1 (a share price of below $10)! CCUR could rally to $10+ quickly!