Investigative Services Agencies, Inc. Announces Availability of Visibility Report
2007-02-14 07:04 CT - News Release
CHICAGO -- (Business Wire)
Investigative Services Agencies, Inc. (Pink Sheets:IVAY) announced today that Certified Financial Analyst and Money Manager Holmes Osborne III has completed a Visibility Report on IVAY. Below is the entire Visibility Report.
VISIBILITY REPORT: Investigative Services Agency Wins Government Contract from Carlyle Group’s USIS
Report by Holmes R. Osborne III, CFA
Stock Symbol: IVAY
12-Month Target price of $2.10
Long-Term Target price of $7.00
Overview
ISA specializes in background checks, investigations, corporate fraud investigations, supplying body guards, and other services in the security business. ISA’s goal is to increase its presence in homeland security, counterterrorism, and background checks. ISA has won a government-related contract from USIS to supply agents to perform background checks on government employees. ISA has also developed a plan to acquire existing investigative agencies in targeted areas of the United States, and is working on developing anti-terror, homeland security-type technologies.
ISA-USIS Relationship
The ISA relationship with USIS is impressive. USIS is a near-billion-dollars-in-sales private company owned in part by the Carlyle Group and is managed by several former General Electric officers. USIS is the largest supplier of background checks to the federal government. The Office of Personnel Management (OPM) has mandated that USIS outsource some of this work. ISA has won the first of such outsourcing contracts in what could be several contracts to supply agents to perform screening for government employees and other government security-type work. As a result of this contract, ISA is in the process of hiring 400 agents over the next three years, fifteen of which are already hired. By the end of 2007 ISA expects to have 150 agents in the field.
The Carlyle Group
Because the Carlyle Group is very well connected, USIS and ISA could very well be in a good position to get much more investigative- and security-related business. The board of directors and advisors of the Carlyle Group include former President George H.W. Bush, former Secretary of State James Baker, and former Prime Minister of Great Britain John Major.
James Miller
ISA's management team is strong and growing. It is led by James Miller. Miller is CEO of ISA and has a level three certification in homeland security through ACFEI (The American College of Forensic Examiners) and is on the Emergency Homeland Security Response Team. He has an MBA degree from the University of Chicago. ISA has seventeen employees, many of whom have experience in law enforcement and the military. ISA has been in business for nine years.
Revenues and Earnings
When ISA’s first 150 new agents are in the field, ISA predicts that the 150 agents will conduct background checks that will result in revenues for ISA of $17,550,000 a year and $4.3 million in earnings. This is the most conservative estimate of eleven estimates that ISA has given. With a current share count of 42 million, the earnings per share would be 10.5 cents a share. This number includes current and forecasted income based upon only the first 150 agents in the field.
Safe Room Technology
ISA is also working on some interesting anti-terrorist technologies. ISA has hired Stanley Weiner, M.D., a professor of medicine at the University of Illinois and an expert in infectious diseases. Dr. Weiner is working on a technology to turn a room in a house into a “safe room.” A safe room would allow people to gather into a room and protect against a biological weapons attack. The room would have the supplies to thwart such an attack.
Investigative Agency Acquisitions
ISA is also in talks for five investigative agency acquisitions. These acquisitions will be funded by approximately 10% in cash and the rest in shares. James Miller feels that the new acquisitions will be accretive to the bottom line because most of the agencies operate at break-even, and ISA’s management and economies of scale from the size of ISA will make these new firms immediately profitable.
Target Stock Price
Based on only the current USIS contract and current earnings, and excluding any future USIS contracts, future acquisitions, or sales of the safe room, a conservative estimation, assuming first year net earnings of $3.4 million after the first 150 agents are in the field and 42 million shares outstanding, would yield 10.5 cents earnings per share. At a price-to-earnings ratio of 20, the stock would trade at $2.10. When all 400 agents are in place, earnings would jump to 34.9 cents per share, and, at a price-to-earnings ratio of 20, the stock would trade at $7.00 per share.
Visibility Report Disclosures
Holmes Osborne does not hold any shares of ISA. Furthermore, Holmes Osborne’s views in regard to this report are his own personal views. Holmes Osborne is a member of the CFA Institute and strives to meet its guidelines on research and disclosures. This report is based upon data obtained from sources we believe to be reliable but is not guaranteed as to accuracy and does not purport to be complete. The report should not be construed as advice designed to meet the particular investment needs of any investor. Opinions are subject to change. Holmes Osborne was paid $1,500 by ISA to write this Visibility Report. Holmes Osborne does not own any shares of ISA. Holmes R. Osborne III, Inc., 1223 Wilshire Blvd., #1471, Santa Monica, CA 90403; 310-452-0910.
Caution Concerning Forward-Looking Statements
This press release and the Holmes Osborne Visibility Report include certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the current expectations or beliefs of management of Investigative Services Agencies, Inc., and are subject to uncertainty and changes in circumstances. Actual results may vary materially from those expressed or implied by the statements herein due to changes in economic, business, competitive, technological and/or regulatory factors, and other factors affecting the operation of the businesses of Investigative Services Agencies, Inc. Investigative Services Agencies, Inc. is under no obligation to, and expressly disclaims any such obligation to, update or alter the respective forward-looking statements, whether as a result of new information, future events or otherwise.
Contacts:
IVAY
John Wright, 312-755-9700
Source: Investigative Services Agencies, Inc.
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