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NHAnalyst
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I am a private investor looking to share ideas here on Seeking Alpha.
  • Small Cap Play: DHX 0 comments
    Nov 14, 2011 9:30 PM | about stocks: DHX

    First off, I apologize for not posting a report last week.  I will try to post a blog weekly, but sometimes I am unable to get to the computer on Monday nights. 

    The company that I am reviewing this week is Dice Holdings (NYSE:  DHX).  The company, through its subsidiaries, runs a few websites that provide specialized career development services.  Please do not confused Dice with the video game company that goes by the same name, the two companies are not related.  The company operates in three segments:  Tech & Clearance, Finance, and Energy.  The websites that these segments operate are listed below:

    Tech & Clearance: Dice.com & clearancejobs.com

    Finance:  eFinancialCareers.com

    Energy:  WorldWideWorker.com & Rigzone.com

    Other Websites: AllHealthCareJobs.com & TargetedJobFairs.com

    Of all the websites in their portfolio, Dice.com and eFinancialCareers.com are their strongest assets.  For the third quarter of 2011, revenue grew 36% YOY.  This was driven by 31% revenue growth at Dice.com and 29% revenue growth at eFinancialCareers.com. 

    I have personally used eFinancialCareers.com and I am impressed with the quality of the website and search results.  Compared to other major job search engines, eFinancialCareers.com does a great job filtering out postings that are not related to your line of work.  If you type in “Research Analyst” into indeed.com, you will get research analyst positions not only in finance, but also in healthcare, academia, manufacturing, etc.  By going to a website that focuses on a particular industry, the user has a more enjoyable experience due to the better search results.

    Now we can look at the valuation.  Dice is currently trading at a forward P/E of 13.4 and a PEG of 0.70.  Using a five year DCF model with a growth rate of 20%, discount rate of 17%, and terminal growth of 3% (conservative in my opinion), I arrive at an intrinsic price of $11.21.  Another one of my proprietary models says that with current market conditions, intrinsic price is $9.50.  Either way, at $8.29, the company is trading below its intrinsic value.

    I would label this as a growth company and not recommend it if you are looking for a value play.  As with any small-cap company that conducts its business by running websites, constant monitoring will be necessary if you decide to become a shareholder of Dice.

    Please comment below and tell me what you think of DHX.

    Disclosure: I have no positions in any stocks mentioned, and do not intended on initiating a long or short position over the next 72 hours.

    Disclaimer: As with any investment, due diligence is required. The opinions in this article are not intended to be used to make a particular investment or follow a particular strategy.

    Stocks: DHX
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