Seeking Alpha
Value, growth at reasonable price, contrarian, newsletter provider
Profile| Send Message|
( followers)  
Ciber, Inc. (NYSE:CBR)
52-week range: $2.03 (Mar. 6, 2009) - $8.97 (Sep. 13, 2008)

CIBER is a pure-play international system integration consultancy and outsourcing company with superior value-priced services and reliable delivery for both private and government sector clients. CIBER's services are offered globally on a project- or strategic-staffing basis, in both custom and enterprise resource planning [ERP] package environments, and across all technology platforms, operating systems and infrastructures.

Founded in 1974 and headquartered in Greenwood Village, Colo., CIBER now serves client businesses from over 40 U.S. offices, 25 European offices and seven offices in Asia/Pacific. Operating in 18 countries, with more than 8,500 employees and annual revenue over $1.1 billion, CIBER and its IT specialists continuously build and upgrade clients' systems to "competitive advantage status." CIBER is included in the Russell 2000 Index and the S&P Small Cap 600 Index.

Shares of Ciber got clobbered in early March when some debt was coming due in the midst of the tightest credit market in decades. The company chose to issue shares to raise capital and the market reaction was brutal. The stock bottomed at $2.03 and has since rebounded to $3.29 /share.

Second quarter earnings were released in late July. The combination of the extra shares outstanding and the poor economic conditions cause the company to estimate full-year earnings of $0.30 - $0.33 /share versus 2008’s record high of fifty cents per share.

What makes me so excited about Ciber, then? The valuation has never been more compelling. Here are the per share numbers from the last seven years as reported by Value Line:

Year

Sales

C/F

EPS

B/V

Avg. P/E

Avg. P/BV

2002

9.49

0.40

0.22

5.20

32.5x

1.7x

2003

11.81

0.53

0.31

5.20

23.5x

1.5x

2004

13.48

0.70

0.45

6.04

19.5x

1.4x

2005

15.41

0.68

0.38

6.07

19.8x

1.3x

2006

16.13

0.69

0.40

6.74

16.3x

0.9x

2007

17.81

0.76

0.47

7.48

16.1x

1.0x

2008

19.83

0.79

0.50

7.53

11.6x

0.8x

With this year’s estimate now with a low end of $0.30 and next year’s consensus at $0.36, the multiple is now < 11x 2009’s and under 9.2x 2010’s projections. Compare those with the historical medians from CBR’s prior years.

The discount to book value is even more striking. After the dilutive effect of this year’s share issuance the current book value is now $7.20 /share. That puts the price/book value at an all-time low of 0.46x. Typically CBR has commanded about 1 – 1.5x book value with peak valuations running more than twice B/V. A return to even 0.8 times present book value would take the shares back to $5.76 or up more than 75% from last week’s close.

Is that a crazy target? Hardly. Ciber actually traded as high as $5.66 early this year and touched highs of $8.97 - $11.70 at some point in each calendar year from 2000 right through 2008.

Once quarterly comparisons turn positive year-over-year I expect CBR will again trade for at least 14 - 16 times earnings, which would also support a share price in the $5 - $6 range within 12 – 18 months. If things pick up quicker or better than currently expected a $7 - $9 price is very possible.

This is a stock to just buy and put away for a while knowing you have an excellent chance for 75% or better gains without a lot of apparent risk.

Disclosure: Author is long CBR shares.

Source: Ciber: A Healthy Small-Cap with Huge Upside