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Value Scouter(slinj) is value investor who follows value investing school of thoughts. His investment thesis centers around 1) Net-net stock where the company trades significant below liquidation value; 2) company with lasting moat that is trading at discount to its intrinsic value based on one... More
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  • MHH, CBR and VOL comparison 0 comments
    Nov 22, 2009 9:17 PM | about stocks: MHH, CBR, VOL
    Some nice write up are already available on MHH, VOL and CBR, see link below for further research:
    MHH:
    http://seekingalpha.com/article/158565-something-good-is-going-on-at-mastech
    VOL:
    http://seekingalpha.com/article/163860-volt-information-services-going-where-the-panic-is
    CBR:
    http://seekingalpha.com/article/155088-ciber-a-healthy-small-cap-with-huge-upside
    Since they are in similar business, i.e. staffing company for private or government agencies, I decided to take a look at these three companies and compare.
    First off, VOL appears to be quite cheap after the run down last month or so, presumbly due to the delay in 10Q filing which might be related to some past revenue reinstatement. 
    It is losing money for the past few quaters, have not filed the latest 10Q as mentioned above, so the latest info one can gather for VOL is from its quarter ended May 3, 09.  VOL has lots of cash and other short term investment, it has 382 M of net Account receivable.
    However, if you look closely at the their numbers, VOL is hit on non cash items such as impairment and depreciation. It is still cash flow positive, for 6 months ended May 3, 09, it generated 33.2M operation cash flow. 
    With a market cap of 193M on Friday and is still way below the net of current asset less total liability. 
    MHH looks the best among three.  It has very high quality balance sheet numbers.  For instance, cash accounts for 48% of current asset, it is also accounting PPE, good will etc. very conservatively. In addition, MHH has a OI margin of 4.2% the latest quarter, that compared to 2.7% for CBR.  It is also accumulating cash at ~1.3M/Q. The only drawback that appear to me is in a year to year comparison, MHH revenue falls more than that of CBR and VOL (28% vs. 14.5% vs. 20%).  Bigger firms like CBR can weather the recession better, which makes sense. 
    CBR has sequentially improved performance.  Its latest quarter would have generated 0.08 EPS, if the one time charge on law suit settlement was not incurred, and that is an improvement vs. 2Q's 0.07 EPS with comparable revenue numbers.  Its SGA # looks high, but that is more related how does CBR accounts for Cost vs. SGA.  The latest filing for NEO compensation was not that comforting given the "performance", so that is one piece worthy watching.
    In addition, good will accounts a good portion of the balance book and is steadily increasing. The good will size and increase definitely contributed to the trending of equity. 
    In terms of cash flow, CBR generates 61M from operation for 9 month ended 9/30, Another thing going against CBR is that it has increase shares outstanding over the last two quarters by 4million. 
    All in all, MHH and VOL probably are relatively better investment, with MHH has the best safety.  However, slightly improvement in VOL by turning it number into positive could have very positive effect on the price.
    CBR has a few things worth monitoring, but its ~30% cash yield is also tempting.   

    Stocks: MHH, CBR, VOL
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