Callidus Software: Sales goals via computer

Anyone who has ever been in marketing knows that it's possible to question a sales goal by noting that the boss may have been a little too optimistic. Now, however, there is an outfit in San Jose that has computerized the quota calculation process....and there does not seem to be an "appeals" subroutine.

Callidus Software (NASDAQ: CALD) provides sales performance management and enterprise incentive management software systems. Its programs are used to model, administer, analyze, and report on sales performance and incentive management plans that compensate employees and distribution channel partners for the achievement of sales quotas, product and territory milestones, and customer satisfaction. The company targets executives, who use its applications to align employee incentive programs with corporate business and profit objectives. Oracle Corporation (NASDAQ: ORCL) is a major competitor.

Callidus pleased investors last week, with Q2 numbers that handily beat Street expectations on both the top and bottom lines. It also offered solid upside guidance for Q3 revenues. It was the company's third consecutive quarter of both record revenues and forty percent growth (y/y).

The share price popped on the news and has since been consolidating the gain in a bullish "flag" pattern. Prices frequently exit flags moving in the same direction they were traveling when they entered them. In this case, that would be to the upside.

Brokers recommend the shares with two "buys". Analysts see a 179% growth rate, through the next year. The CALD Price to Sales ratio (3.35), Price to Book ratio (4.95) and Sales Growth rate (46.49%) compare favorably with industry and sector averages.

Institutional investors hold about 58% of the outstanding shares. Over the past 52 weeks, the stock has traded between $4.46 and $10.11. A stop-loss of $8.45 looks good here.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.