GeoSpecial Super Micro Computer (NASDAQ:SMCI) is a leader in server technology innovation and green computing, providing customers around the world with application-optimized server, workstation, blade, storage, and GPU systems. In our 10/18/2013 email, when the stock was trading at $14.18 we stated:

“For the past three years shares have made a few strong runs but were unable to hold their gains due to the company’s inability to consistently grow it’s business. Despite some of the obstacles associated with accurately predicting quarterly revenue and EPS data, we’ve kept SMCI coded as a GeoSpecial based on our belief in the long term prospects of the company as the cloud space evolves and gains momentum.”

Yesterday, shares of SMCI spiked on strong second quarter 2014 results.  The company reported:

• Quarterly net sales of $356.4 million, up 22.3% from $291,487 in the same quarter of last year.
• Non-GAAP EPS of $0.35, compared to $0.18 for the same quarter of last year.

Management provided third quarter 2014 revenue guidance of $320-$350 million and non-GAAP EPS guidance of approximately $0.24-$0.30. Both guidance ranges would beat analyst estimates if the company meets the halfway-mark or upper side of each guidance range. At current prices of near $23, shares of SMCI seem fairly valued based on trailing and forward P/E analysis.  But, at 0.66, its EV/S is comfortably under 1.0, so some upside may be in the cards (shares may warrant to trade at an EV/S over 1.0).

We will keep SMCI coded as a GeoSpecial based on our previous commentary stating our belief in the long term prospects of the company as the cloud space evolves and gains momentum.