Micro and Small Cap Reporter

AVG Belongs Both In Your Computer And Your Portfolio

AVG (NYSE:AVG) has seen considerable selling pressure over the past week due to a few non-relevant/non-material issues and is currently priced at a ridiculously cheap valuation. It is currently trading at 6x 2014 FCF (consensus), which is incredible given AVG's SaaS-like characteristics (subscription based model, 90% gross margins). FCF is the correct metric to examine since it is less manipulable than EPS, and we want to emphasize that FCF higher than EPS is an extremely positive sign. A conservative FCF multiple for this type of company would be closer to 12-15x. Although there aren't pure public comps (Symantec (NASDAQ:SYMC) is somewhat similar), here are some SaaS companies with similar profiles:

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AVG is a...

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