SkillSoft PLC (NASDAQ: SKIL) provides
on-demand Internet-based training courses for professionals in business and information technology (IT). The company catalog includes more than 6,600 courses addressing such issues as project management, sales, business strategy, finance, regulatory compliance, operating systems, network technologies and Web design. SkillSoft also offers online coaching for more than 100 IT certification exams and provides access to some 19,000 engineering, IT, and business books online. Clients include IBM (NYSE: IBM), Merck (NYSE: MRK) and Yahoo! (NASDAQ: YHOO).
The firm pleased investors last week, when it reported Q2 EPS of ten cents and revenues of $83.3 million. Analysts had been expecting seven cents and $82.4 million. Management also guided Q3 EPS to 9-10 cents (nine cent consensus), Q3 revenues to $84.0-$85.5 million ($84.83M consensus), FY09 EPS to 35-38 cents (34 cent consensus) and FY09 revenues to $335-$338 million ($336.43M consensus).
The SKIL share
price popped on the news and then moved into a bullish "flag" consolidation pattern. Stocks frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.
Brokers recommend the issue with three "strong buys", two "buys" and one "hold". Analysts see a 32% growth rate, through the next year. The SKIL Price to Cash Flow ratio (13.20), Price to Free Cash Flow ratio (19.28), Sales Growth rate (16.50%), Operating Margin (14.15%), Net Profit Margin (19.43%), Return on Assets (12.72%), Return on Investment (21.52%) and Return on Equity (32.24%) compare favorably with industry, sector and S&P 500 averages. Institutions hold about 82% of the outstanding shares. Over the past 52 weeks, the stock has traded between $7.75 and $11.42. A stop-loss of $9.50 looks good here.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in any of the stocks mentioned above.
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