(Editors' Note: This article covers a micro-cap stock. Please be aware of the risks associated with these stocks.)
Helios and Matheson Analytics Inc. (NASDAQ:HMNY) is an IT services organization that provides Fortune 1000 companies with application value management, application development, integration, independent validation, and infrastructure information management services. These various services account for 91% of the company's revenue stream and accounting for approximately 2% of its revenue stream is the marketing and distribution of independent software. The following will explore the company's recent progress as well as assess the growing market for big data and how it could potentially impact Helios and Matheson in the future.
Currently, there are various opinions with regard to the big data analytics market. While many presume it to be the future for obtaining consumer surplus and a billion dollar industry, others believe it is an overhyped, over-invested, and oversold bubble. That being said, some of the best CTOs in the industry are currently strong believers that big data will become a key aspect of increasing business value and making companies more efficient. In addition, with the usage of smartphones and the Internet increasing everyday, the amount of data being generated is going to increase dramatically for decades to come. That being said, companies that are focalized in the management of infrastructure information (such as Helios and Matheson) are likely to grow substantially in coming years. In fact, when respondents of active big data efforts were asked which platform components are most commonly implemented into a company's architecture, the most widely applied items were Information Integration and scalable Storage Infrastructure. Among the two, Helios and Matheson focuses strictly on Information Integration and is responsible for developing methods of processing big data for major companies.
From a fundamentals standpoint, Helios and Matheson has also managed to eliminate all of its debt with total liabilities of only $1.3 million and total assets of approximately $5.5 million. The company also appears to be making itself more profitable as its basic and diluted profit per share doubled between 2011 and 2012. The company's revenue has also increased by 16% in the second quarter of 2013 compared to 2012's second quarter. Another factor to consider when examining the company is the potential of a buyout. Recently, Major Big Data mining companies have been acquiring smaller companies at premiums as a means to absorb strategic clientele bases. The rational for them doing so has to do with the exponentially increasing size of the market, which is allowing smaller companies to take market share from bigger ones. Such recent acquisitions can be evidenced by purchases from key players such as Cisco (NASDAQ:CSCO), FoundationDB, MyRedis, and EMC (EMC). With its debt-free balance sheet, its growing revenue base, and its 30-year history of specializing in Information Integration, Helios and Matheson could potentially become an attractive target to be bought out by a major data analytics company if revenues continue increasing in coming quarters.
With the popularity of big data analytics growing among corporate entities and major company acquisitions becoming more frequent in the last three years (30 have already happened in 2013 alone) Helios and Matheson Analytics Inc. is an interesting position to follow in coming months. If its revenues increase, then it may easily become a likely candidate for acquisition. Currently Helios and Matheson's share value is consolidating at $7 a share after its recent surge in share value from $6-$10 before profit taking. For the trailing twelve months, the company has a P/E ratio of 29.6 and an EPS of $0.22 with revenues of $13.4 million. That being said, quarterly earnings for the company have consistently been highest during the third and fourth quarters. At current share prices, the company may be a rather risky investment for conservative investors; however, for those interested in the future of big data this is definitely an interesting position to consider taking.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.