Concurrent Computer Corp (CCUR): Risk/Reward Remains Favorable
Posted on July 1, 2009
Though we currently remain wary of initiating new long positions given the long market rally, Concurrent Computer Corp (Nasdaq: CCUR current price: $5.60, recommended price: $3.75) remains our favorite idea from the three long picks recommended to members, back in February 2009. We continue to believe that, at current prices, the stock still offers an excellent risk/reward opportunity.
CCUR products consist of hardware and/or software as well as integration services, sold primarily to broadband companies that provide interactive, digital services for the delivery of video. The company is basically operating in the high-growth and exciting market of Video On-Demand (VOD). From the company’s website:
“Concurrent’s on-demand technology is shaping the future of video. As a leading provider of open, commercial-grade video solutions, Concurrent enables service providers to deliver the next-generation of rich, reliable and personalized video applications to any device, anytime, over any network.”
Like many of the stocks we invest in, CCUR has been an abysmal performer over the years, until quite recently. What caught our attention, as in other recent recommendations, was the strong balance sheet (cash at 50% of market cap, and no debt), and solid cash-flow, despite large one-time accounting losses. Additionally, financial results, as measured by the top and bottom line, are improving, and the valuation remains quite depressed with an EV/TTM Revenue at a measly 0.3X and an EV/TTM EBITDA of about 3.5. Cap-ex needs at the company are minimal.
If the company continues to deliver strong financial results, and announces additional high profile partnerships, we believe more investors will discover the stock, especially considering the company’s active role in the VOD market.
Disclosure: Affiliates of Envoy Global Research, and its principals, own shares in CCUR. All ideas, opinions, and/or forecasts, expressed or implied herein, are for informational purposes only and should not be construed as a recommendation to invest, trade, and/or speculate in the markets. Any investments, trades, and/or speculations made in light of the ideas, opinions, and/or forecasts, expressed or implied herein, are committed at your own risk, financial or otherwise.
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This site may include market analysis and we may own shares in the stocks mentioned in our reports. All ideas, opinions, and/or forecasts, expressed or implied herein, are for informational purposes only and should not be construed as a recommendation to invest, trade, and/or speculate in the markets. Any investments, trades, and/or speculations made in light of the ideas, opinions, and/or forecasts, expressed or implied herein, are committed at your own risk, financial or otherwise.
Hi
I might be wrong but at first glance it looks like their op margins are very weak vs 3q09 , that is 2,14% vs 5,36%.
gross margins seem the same 57% vs 57% that is good bc of the decline of revs -18%
in truth the key comparison is vs 4q08
where we find much better number
gm 57% vs 53,87%
The key figure, I believe, is the $29 million in cash (no debt). Therefore the EV is about $10 million a current prices, which appears very cheap relative to sales and cash-flow. This company’s revenues fluctuate alot quarter to quarter, so I believe this was a major overreaction, to what amounts to a decent quarter. Notably, competitor SEAC trades at about 1X EV/Sales, while CCUR is at 0.14 EV/Sales. This gap is too wide and will narrow.