Navteq Navigates the Way

Jan.24.07 | About: NAVTEQ Corp. (NVT)
Navteq Corp. (NVT), a leading digital map services firm based out of Chicago, Illinois, is another constituent in the Clear Spin-Off index licensed for the Claymore/Clear Spin-Off ETF (NYSEARCA:CSD). The company provides digital mapping services in 58 countries on 6 continents with door-to-door directions and points of interest along the way. These services are provided through many automobile navigation systems in North America and Europe, and on all of the top navigation websites.

Founded in California in 1985 as Karlin & Collins, Inc., NVT was bought by Philips Consumer Electronic Services B.V., a wholly-owned subsidiary of Royal Philips Electronics (NYSE:PHG), and spun-off on August 6, 2004.
NVT began mapping the world with a hands-on approach. In order to apply information to vehicle GPS-enabled navigation systems, a variety of mobile devices, and other map websites, and government and commercial entities in industries that involve fleets of vehicles, the company follows a two step process. First they send analysts into the field to drive on roads and record everything on their trips including speed limits and exact street address details. Then this information, aerial shots, and paper plots are digitized by mapping experts into both 2D and 3D maps.

Recently, NVT has been expanding its business into various online and print map services. In early November of last year, the company decided to buy, a leading source of personalized traffic information in the U.S., an acquisition that will help the company “bring the map to life.” In December, the company also agreed to acquire Washington D.C. based The Map Network, a provider of official print and online maps of over 90 U.S. cities.

NVT fundamentals, like its business model, also show potential with a year over year quarterly revenue growth of 16.00%, handily beating the industry average of 11.60%. Profitability is also notable, with operating margins of 24.22%, more than 7 times the 3.15% industry average. Its return on equity [ROE] of 15.99% is also above the industry average of 14.50%.

While the current price of the stock may seem slightly inflated from an initial evaluation of a price to earnings [P/E] ratio of 33.36 which is materially above the 29.50 industry average, its price to book [P/B] value of 5.23 compared to the industry average of 9.78 indicates room for further price appreciation. Based on these factors and other calculated factors, this spin-off shows more potential as it expands its footprint.

Disclosure: NAVTEQ Corp. [NVT], is a constituent in the Clear Spin-Off index licensed for the Claymore/Clear Spin-Off ETF [AMEX:CSD]. Mr. Corn is CEO and founder of Clear Indexes LLC which publishes the index and he owns shares of the ETF: CSD. He does not directly own shares in [NVT].

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