GlobalSCAPE's Growth is Just Beginning

GlobalSCAPE (GSB) is a software development company focused on utility software. This PC and server based FTP software is needed for about everyone that does any analytical or computer work. Therefore, if you are a webmaster, graphics designer, business analyst, programmer, DBA, or integrator - you will be using these type of software utilities every day! They also have a Continuous Data Protection product called Avail.

GlobalSCAPE's revenues and earnings are growing rapidly. ROA is 33%, ROE is 44%, ROI is 44%. Zero long term debt - a very healthy sign for a software company.

GlobalSCAPE has just begun the process of penetrating the US Government Agencies. This government revenue stream is in addition to the growth of their product lines.

Just a few days ago, the highest level of encryption certification was announced. This will lead to more government bid wins and also in financial, healthcare, medical products, food companies, etc. The demand for "high security encryption" on data files is critical in our current environment.

The October 23rd 2007 press release says:

GlobalSCAPE (AMEX:GSB), a leading provider of products that allow companies to move, store and share files securely over the Internet, announced that the Cryptographic Module to be embedded in its Secure Server and flagship, enterprise-class EFT Server products, has satisfied Federal Information Processing Standards [FIPS] pre-validation requirements. The Cryptographic Module has been placed on the FIPS 140-2 pre-validation list and now awaits the final certification review.

Forward PE on this 50% annual growth company is a 25 (forward PE) at $7.25 stock price. Therefore, share price continues to lag the growth rate, inferring a potential stock to invest in. One analyst has his goal price at $12 currently.

Within 3 years, revenues have climbed from 10 million to estimated 20 million annually for 2007. Based on the San Antonio newspaper article that interviewed the executives at GlobalSCAPE, 30+ million the next year is "reasonable and feasible".

Disclosure: Author has a long position in GSB

Comments

[Mighty_Mouse:]

I appreciate all the info, the perspective and looking at the ROA, ROE, ROI is smart. It's also important to consider, as you did, the aspect of their stock price compared to their growth rate and how that translates for investors, which many young investors do not understand all too well:

"Forward PE on this 50% annual growth company is a 25 (forward PE) at $7.25 stock price. Therefore, share price continues to lag the growth rate, inferring a potential stock to invest in. One analyst has his goal price at $12 currently."

2007 Oct 29 07:56 PM

[Philip Obal:]

Agreed. Stock price is low and a goo buy. GSB could well jump into the $8 to $10 range rapidlly on this upcoming quarterly earnings on Nov 13.

With a growth rate at 50 to 60% (on revenue and earnings) - the Forward PE should be in the 40's or 50' - but is only 25.

Therefore, we have a stock price that is "trailing" behind and will catch up as more organizations see this growth. Stability is already proven with the organization, zero long term debt, and they do what they say (commitment).

2007 Nov 01 12:19 PM

[User 124117:]

Missing the volume numbers (with an understandable explantion) is one thing, but taking this far down is crazy. I won't bet the house and car but I am a buyer today.
Would appreciate Your thoughts.

2007 Nov 20 02:34 PM

[Philip Obal:]

GlobalScape has a six year plan and the 2007 plan was 20 million... they announced the quarterly earning that was more in the range of 18 million, but also mentioned 3 large deals, inferring that they were larger than the DOD deal. They are very good about not mentioning a deal - until it is well underway and pretty much a done deal.

Pipeline looks solid for GSB - new large deals, new products launched, plus the current ones. GSB is looking for an international software company that they can acquire - so they can expand easily.

Ouch BTW! IMHO, when GSB announced that they will NOT make the 20 million - then the momentum players have "moved on" and are selling, which is driving the stock down significantly. In addition, this is a small cap, where a large sale or purchase can make it jump around (up to 10% in a day).

BTW - There is a good chat board on ragingbull.com that you might enjoy.

Key is to NOT fall in love with any stock/company, but to analyze it well, as well as your investment style. I am an opportunist long, that sees this 4.25 to 4.75 range a bargain, and I have recently bought more GSB shares.

2007 Nov 24 12:08 PM

[Philip Obal:]

FINALLY, the chat board on Yahoo is done. Yahoo only took six months, but had many requests to do this. Yahoo will not be a leader, unless they get much more responsive to customer needs. GlobalScape news and chat is on both ragingbull.com and on Yahoo Finance under GSB.

2007 Dec 13 10:12 AM

[Philip Obal:]

GlobalScape has been trading in the 5.50 to 6.00 range lately. If you caught the dip at 4.00 (or close to it) - you have done well!

2007 Dec 13 10:14 AM

[User 168670:]

great call-it is now under $2.00

2008 Jul 10 05:12 PM

[Philip Obal:]

Nice research report on GlobalScape at goldstockanalyst.net/?...

GlobalScape is now at a VALUE & BARGAIN PRICE of 1.89 a share. With a bit of good news - GSB should be at $3.00 a share and climbing.

2008 Jul 16 11:48 AM