Recs

3
Player Avatar ToddMCTC (29.61) Submitted: 8/13/2008 8:32:00 AM : Outperform Start Price: $31.39 ITG Score: -103.78

10.68x times forward earnings. That's before you back out eight dollars in net cash. Back out the cash and you come up with a forward PE of 7.97. Not bad for a company that takes no risk. The company offers an execution platform, order and portfolio optimization and other services for mutual funds and hedge funds. Formerly a unti of Jefferies this company grew revenues at 15% last year and 50% the year before, oh and that is just US Operations. International revenues grew at 61% last year and 19% the year before and remain 15% of total sales.

Consider that once the platform has been developed all incremental sales above fixed costs fall to the bottom line. In the depth of the markets in 2003 and 2004 ROE dropped to a low 11.7% while sales declined by 13.8%. Since this time ROE has stabilized at around 16%. Book Value currently stands at $17.55 per share. A 12% ROE disaster at the firm would put them earning $2.10, not the $2.96 forecast. Ex out eight dollars in cash and you currently have a stock trading at 11x FPE. Not too bad for a worst case scenario.

Featured Broker Partners


Advertisement