LifeLock (NYSE:LOCK)

CAPS Rating: 3 out of 5


Player Avatar SaiyanBroker (48.16) Submitted: 4/1/2013 1:39:04 PM : Underperform Start Price: $11.04 LOCK Score: -14.75

I couldn't value this company at a P/E of about 70- especially since it offers services that would otherwise be free to the consumer. The company has had a nice annual sales growth rate and EBITDA is on the climb. However, I'm very hesitant about the long term potential for this company. (I don't believe this would fall onto the "Permanent Value" list of Warren Buffet's.)

The target market, I wager, has had near maximum exposure to this service meaning future sales growth will mostly rest on continuing customers rather than new ones. As is the case with most companies like this, I expect job cuts due to declining sales forecasts, resulting higher pressure from sales departments to sell new products to dedicated customers, resulting in a declining consumer base (especially when a newer security company looks like a fresh alternative). We will see what happens.

P/BV and P/S are also valued way too high right now. Considering the financial statements, this may have been a good mid-term investment had it not opened at $10- a value that automatically made it overpriced. This company is simply not worth what the market is currently spotting it at. I will hold this thumb until a serious turn around seems likely, mostly ignoring short blips. (Unless I feel like hoarding points :D)

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