Small 4.5% Yielder Beats Estimates And Is Heading Higher

Technology has had a poor October, it being one of the worse performing sectors during the month. Most stocks in the sector have either missed on the revenue side and/or issued disappointing guidance. However, one high yielding tech stock bucked the trend this morning and is up substantially in early trading as a result. It is ClickSoftware Technologies (NASDAQ:CKSW) which is underfollowed but looks like it is going higher. It could make a good addition to growth and/or income portfolios at these levels.

Key highlights from CKSW's earnings report:

  • Earnings came in at 9 cents a share, two cents above consensus estimates.
  • Total revenues came in at $27.3mm, up 18% Y/Y.
  • Software license sales increased even more at a 24% annual clip to $11mm.
  • Management reiterated the previously provided full year 2012 guidance of revenues in the range of $98 to $103 million, representing about 13% to 18% growth over 2011.

ClickSoftware Technologies provides software products and solutions for workforce management and optimization in the Americas, Israel, the Asia Pacific, Europe, the Middle East, and Africa.

7 additional reasons to buy CKSW at under $8 a share:

  1. The company has approximately $50mm in net cash on the balance sheet which amounts to more than 20% of market capitalization at current levels.
  2. CKSW provides a generous dividend yield of 4.5%.
  3. The company is experiencing solid revenue growth this fiscal year and analysts expect faster growth of over 18% in FY2013.
  4. The median price target held by analysts that cover the stock is $10 a share, more than 25% above the current stock price.
  5. The stock is selling near the bottom of its five year valuation range based on P/B, P/S and P/CF.
  6. The company has grown earnings at better than a 20% annual rate over the past five years and is selling at just over 15x forward earnings.
  7. It is has solid long term technical support just below its current stock price (See Chart)

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in CKSW over 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.