Even with Heavy Analyst Coverage, webMethods, Inc. Continues to Beat Estimates (WEBM)

Barry Gitarts submits : webMethods, Inc. (WEBM) offers SOA (Service-oriented architecture) and BPM (Business Process Management) -- tools which are used in the planning and integration of Sarbanes-Oxley and Patriot Act compliance. For this reason alone, it is obvious why this company's products would be in demand right now.

What is not as obvious is the companies main focus, which is not compliance, but strategic business and IT process modeling, integration and monitoring (then rinse and repeat). With management styles getting more sophisticated (Six Sigma, Performance Management), a pen & pad may no longer cut it, and even an excel spreadsheet can get messy.

Usually I would be quick to dismiss such a hard to understand business model, but with 1,300 customers, earnings growth and coverage by 11 analysts (which is unusual for a smallcap) I see potential, mainly because of its hard to understand business model which seems to have created a mispricing. Even with 11 analysts covering the stock, WEBM has beat estimates over the past year. From a growth prospective webMethods products are in use by several big management teams, and no one wants to leave an edge on the table for the competition.

WEBM 1-yr chart: