April 01, 2007
Cognos- Value and Good Fundamentals, does she have a friend?
Cognos, a business intelligence company based in Canada, beat earnings expectations last week, but amidst a very pessimistic Canadian atmosphere issued a revenue forecast below analyst expectations. For those of you that do not want to read a long sentence about Canada: Canada is currently facing record high oil prices. Consequently, Canadian stocks have been beaten down recently.
Here are the reasons to buy COGN:
1. Institutional investors own 62.80% of Cognos, which indicates strong market sentiment. The major holders include Barclays (5.01%), Harris (2.41%), and Meridian (1.18%).
2. Net income is greater than the two most relevant competitors (BOBJ & HYSL), despite having lower revenue than BOBJ.
3. Operated margins of 14.57% are the greatest of relevant competitors.
4. Price/Earnings multiple is lower than both BOBJ and HYSL (32.37, 45.81, 45.71 respectively).
Business intelligence (BI) is a very broad category, but the meat of the industry is implementing IT solutions to give managers more detailed and analyzed information so that more informed decisions can be made quicker and easier than before. With the housing slump in the states and high oil prices holding down the Canadian economy, efficiency is key for companies to continue growth. To borrow a cliché, BI solutions allow managers to “squeeze blood out of the rock” Hence, demand for BI solutions should rise over the next year.
Posted by jwbir at April 1, 2007 05:11 PM