GEO Investing

spcb shares are undervaluedGeoInvesting believes that SuperCom Ltd. (SPCB) shares should be going for at least $11.55 per share, and as much as $18.00 per share on realistic assumptions and a share buyback program;  for these reasons, SPCB shares are undervalued.

SuperCom provides traditional and digital identity solutions to government, and private and public organizations worldwide. Yesterday, the company announced Q4 2014 financial results and we stated If investors push shares of SPCB lower due to missed analyst estimates we may look to pick up shares since 2015 guidance is bullish. We think the stock could ultimately trade at a P/E multiple of 15 on 2015 guidance EPS of $1.20 or $18.00 per share.  Shares sold off early in yesterday’s trading session trading as low as $7.20.  We issued the following premium tweets throughout the day…

  • May look to pick up shares of SPCB since 2015 guidance is bullish.  #GeoCallToAction”
  • We think SPCB could ultimately trade at a P/E multiple of 15 on 2015 guidance of $1.20 or $18.00 per share.
  • On SPCB conference call, CEO “If not for blackout period, I would be buying shares”.
  • GeoTeam participating in SPCB conf call. SPCB 2015 EPS guidance does not include several contracts awards company is bidding for. #InfoArb

The above tweets were 4 timely money-making tweets that were available to only our Premium Members, please subscribe to see full GeoInvesting coverage of SPCB.

SPCB Share Buyback Program

Management also stated they expect to announce a share buyback program within the coming weeks. We are contacting management to see if the $1.20 EPS guidance is taxed since the company has large NOL’s (net operating loss).  In the event that there are no provisions for income taxes in the guidance, we would reduce the EPS guidance by applying a tax rate for valuation purposes.  If we assume a 36% tax rate, EPS guidance would decline to $0.77; applying a P/E of 15 to the fully taxed EPS guidance would yield a short term price target of $11.55.  In any event, with SPCB shares trading at a fully taxed forward P/E of 11 and a trailing EV/EBITDA of 9.6, we think shares have room to go up in value.

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