+ Watch NEI
on My Watchlist
The Company develops and manufactures server appliance solutions that deliver software applications on server appliances.
Network Engines is the perfect set it and forget it limit buy. Network Engines dumped one hell of an earnings warning on investors last month due to customers holding off orders and general delays. Despite this growth remains consistent at 10% per year and they remain marginally profitable. NENG has 30 cents in net cash per share and when we back that out we're looking at a company trading roughly $1 over cash and around 11 times my 2011 estimates. I'm going to take that a step further and try to nab Network Engines at 93 cents per share, or just 63 cents over cash. I fully expect one more quarter of sub-par earnings and feel they will earn only 2-4 cents in 2010 while rebounding to 9-10 cents in 2011. If I get my limit hit, NENG will be trading at roughly 7 times forward earnings with a 10% growth rate for a PEG of just 0.7. These are very reasonable growth targets and I feel NENG is a likely buyout candidate from a larger suitor in the next 3 years. Fair valuation here is closer to $2.40 a share.UltraLong
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