PERI
I've been actively buying PERI in the $1.22-1.24 range the last couple of days. here is what I like.
PERI is a great turn around candidate that is starting to turn profitable on a gaap basis and the way I calculate earnings I would not use the .08, but it is significantly higher then GAAP. more on that later. The next two quarter are seasonally strong and I expect to see huge numbers in q4, mind blowingly good, and q3 I expect to be no slouch either.
Management if anything has been overly conservative on guidence I expect q3 revs to be about 84-85 million versus the 78-81 million they expect. I expect this to lead even to better profits. I expect q4 revs to be in the 92-95 Million range with even better numbers hitting the bottom line. They have started to gain traction, meanwhile the stock is near 52 week lows not reflecting this turnaround. This is the kind of strategy I always try to use find them early, and try not to chase, and I'm clearly not chasing here.
Now what are the numbers I would use. I would use about .034 in q1 and about .05 in q2. As earnings were roughly .085 in much weaker q1 and q2. Now how did I calculate that. The company uses non gaap earnings of .17, and I come up with 1/2. How you ask?
Well I don't include stock based compensation, I don't include the accretion for obligation as I think that should be added to earnings as well. I also adjust the profits using a 25% Tax rate which is what they have used in the past when they were profitable on a gaap level.
Now to earnings estimates going foward I see non gaap earnings (adjusted my way to be in the .08-.10 range in q3) and significantly higher in q4. Granted without a doubt their non gaap earnings will be reported as much higher then what I stated. Also Gaap earning if taxed I expect to be in the range of .04-.06. I of course expect even better results in q4.
Also the comps on both non gaap and Gaap with start to become favorable and their bottom line numbers will show improvement y/y from now on, which is another plus. I expected adjusted eps (The way I look at it) to be in the .30-.35 range. Pop a decent pe on this and it could easily double or even triple. I think PERI might be more a 2017 play where it does some of it's running, but the stock is stupidly undervalued and this quarter was very impressive not that anyone cared and the comp sucked which is why, that changes starting q3 and beyond in my opinion. I believe PERI is very undervalued and I will continue to buy on weakness. All is just my opinion, and I could always be wrong though.
