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WidePoint Corp (WYY) Stock Report

December 21, 2009 – Comments (0) | RELATED TICKERS: WYY

Current Price $0.74

52 week range 0.15 - .99

Market cap 60.68

P/S 1.2

P/B 3.6

5 Year average

P/S 3.9

P/B 7.8

5 year target price

$2.2

Introduction

I happened to stumble across WidePoint while using a stock screener. The numbers looked interesting, so I then continued to evaluate WYY’s business plan and noticed it was relatively simple with only three operating segments.  They derive the majority of their revenue from the federal government, but have a growing private sector consulting segment. WidePoint also sees a growing need at the state and local government level and could capitalize on this growing need and opportunity.

Overview

—  WidePoint is the leading provider of certificate-based security solutions and mobile telecom expense management systems to the federal government.

—  Provides reoccurring revenue products targeting unexploited multi-billion dollar markets.

—  WidePoint intends to continue significantly expanding its revenue base by growing, acquiring and cross-marketing emerging but proven public-sector technologies that have a high probability of wide scale adoption in the commercial sector.

—  WYY maintains numerous contract vehicles, major government certifications, key IT partnerships and a top secret security clearance

Last quarter

—  Q3 2009 net income of $515,000 vs. net loss of $335,000 last year

—  Revenue growth of 28% YOY

—  Increase gross margin 24% vs. 17% YOY

Management Outlook for this current quarter

—  Expect double digit growth in all three operating segments

—  Fourth consecutive quarter of net income and three quarters of EPS growth for next quarter

—  Opportunities within Mobile Telecom Managed Services continues to look promising in the federal sector

—  Pleased to see development at the state and local municipal market

—  Expect the programs and our affiliations with our partners to further support and widen our sales reach and long-term growth.

—  Telecom Managed Services segment was up 28% on revenue of nearly $6.8 million for the quarter.

—  The PKI Credentialing and Managed Services segment recorded a 34% revenue increase to almost $1.6 million

—  Consulting Services segment was up 26% to $3.0 million for the quarter

—   This was the result of both new contract awards and renewals along with expansion work.

Risks Involved

—  Top three customers account for 26%, 20%, and 14% of revenue

—  Transportation Security Administration, U.S. Department of Homeland Security and The U.S. Department of Defense

—  Our contracts with the U.S. Government, and many contracts with other entities, permit the government client to modify, curtailor terminate the contract at any time for the convenience of the government, or for default by the contractor.

Conclusion

—  WYY is a young company with a bright future ahead. They are continuing to grow their market share with the federal, state and local governments and expect double digit growth in the near future

—  WYY is also focusing on growth in its commercial markets with its consulting business

—  The reward outweighs the risk involved with a small cap stock

—  Company is beginning to be profitable and has low debt levels

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