GAXC Big Brother NCR upgraded after 4Q results
2010 Guidance Provided; Revenue Growth of 2% to 5%; GAAP Earnings Per Share of $0.41 – $0.51
Baird analyst Reik W. Read upgraded NCR to “Outperform” from “Neutral” and raised his target price to $17 from $12.
My Comment: NCR at $12/share is trading at 20-30x FY 2010 EPS estimate. GAXC is trading at 7x my FY 2010 ATM EPS est (doesn’t account for DVD contribution in 2010). Hmmm one of these is undervalued. I will be adding heavily if GAXC gets back to my cost basis price (ie $0.80).
Disclosure: LONG GAXC
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Comparing GAXC to NCR we could definitely concede GAXC is undervalued if they can produce a meaningful growth story. However also it should be considered that perhaps NCR is overvalued. Growth appears tepid for a company sell for 20x to 30x its earnings.
Lindsay:
I think GAXC will show us the growth story that it is in the first half of 2010. I would agree with NCR. Analysts like backing out stuff, like pension liabilities. When you back out pension liability NCR will earn 1.25 EPS so thats how they get to their higher net multiple. Of course I could say the same thing about GAXC which produces $5m in EBITDA, so it should at least trade at 10x that or $2+/share
Analysts are great at picking and choosing what numbers they want to look at.
IC