GeoBargain MKTG provides on-demand software and professional services.  The company reported strong  third quarter 2013 results:

  • MKTG beat analyst top and bottom line estimates reporting EPS for the third quarter 2013 of $0.03 vs. analyst estimates of $0.02.
  • Reported revenue growth of 27.5% with revenues of $51.7 million compared to analyst estimates of $48 million.
  • Provided upside revenue guidance with revenues for 2013 expected to be between $201 -$203 million above the previously issued revenue guidance of $195 – $197 million and ahead of the analyst estimates of $197 million.
  • Also sees fiscal 2013 EPS of $0.16 vs. analyst estimates of $0.15.

Please recall on 2/22/13 we wrote our first article on MKTG, “Responsys Inc. (MKTG): Filling the Valuation Gap” when the stock was trading at $7.76.  We then coded MKTG as a GeoBargain on 4/11/13 at $8.97.  On 5/6/13 we issued our follow up report “Responsys (MKTG): Last SaaS Standing” when the stock was trading at $10.80.

We listened to the conference call and it is management’s belief that the company can continue to maintain at least 20%+ growth over the next several years.  We believe the reason MKTG is and has been selling at a relatively low EV/Sales multiple is due to its inconsistant revenue growth of above 20%. (Tier 1 comparables are trading near 4; recently acquired tier 1 comparables have been acquired near 8).  MKTG was trading at an EV/Sales multiple of 1.8 at the time of our first article, and is now trading at an EV/Sales of 3.8.  We believe the market will continue to bid this multiple up as the company continues to perform on its sales objectives, which has been main concern of investors in the recent past.  We are more confident now than we were before that MKTG is a prime acquisition target in a space that M&A activity has been strong and accelerating.  Although we have locked in some gains, we are still long this name.  We may consider buying some deep out of the money CALL options if favorably priced.

GeoSpecial TORM is a global manufacturer and marketer of specialty mineral and pigment products for high performance applications with manufacturing.  The company reported disappointing third quarter 2013 results.  While we are disappointed in the third quarter results, we are still long this name and believe the market will soon begin to value the company on its EPS estimates of $1.17 for 2014.  TORM has been one of our longer term investment positions as we weather that the storm the speciality chemical segment has faced over the past year.

GeoBargain WILC reported strong third quarter 2013 results.  The company reported:

  • Sales for the third quarter of 2013 increased by 12.6% to $ 22.3 million compared to US$ 19.8 million recorded in the third quarter of 2012.
  • Net income in the third quarter of 2013 increased by 36.6% to US$ 2.4 million, or US$ 0.19 per share, US$ 1.8 million, or US$ 0.14 per share, recorded in the third quarter of 2012.

We first coded WILC as a GeoBargain on the Radar on 12/3/2012 at $4.95.  On 2/4/2013 we mentioned that we initiated our long position when the stock was trading at $5.35 and alerted members that we were going to add to our positions prior to fourth quarter 2012 and first quarter 2013 earnings.  WILC is up 47% since we first coded it as a GeoBargain on the Radar.  We will look to exit our remaining position as it is our belief the company’s next few quarterly comparisons could be challenging.