Meager TPNL Valuation in Comparison to Peers.
Thanks for the acquisition updates Chilar. I have seen a lot of news lately highlighting the Payment Processing Industry. Cramer is quite a fanatic of the industry showing the large investment potential that exist and some large consolidators such as the one's previously mentioned taking out the small niche players (such as TPNL).
TPNL is very particular as it is in a very small niche and in my opinion is gradually monopolizing the payment processing business for plasma centers. As it becomes more recognized through growth in this niche as well as its intention to expand into new types of payment processing markets it will start to get noticed by the big guys. This could likely spur some takeover interest for our little friend...
Based on my analysis, this industry trades at some much higher multiples than TPNL's meager valuation.
I did some digging and Parago, inc.'s latest FY revenue was around 38.5M$, the 290M$ takeover puts it at a price to sales ratio of 7.53.
If we were to assume a $8M 2014FYE revenue figure for 3 Pea a similar ratio would mean a stock price of $1.54 (8*7.53/39M shares o/s).
If you take a look at FleetCor Technologies (FLT) it currently trades at a price to sales ratio of 11.4 not to mention a P/E of 38.6.
Blackhawk (Hawk)'s P/e is also quite high at 31.43.
Obviously 3 Pea has been experiencing large operating expenses through its expansion phase but will likely end the year with a few cents EPS, especially with its larger margins in its new proprietary card products.
Let's say 3Pea has a 3 cent eps for the FYE2014, using the average of the top 2 players mentioned, a price of 1.05$ could very well be justified with a P/e of 35.
Once I see the actual FYE for 3Pea I will draft up a thorough analysis including my projections and peer comparables, and will share with the board.
