Innodata Isogen: Playing The Digital Information Distribution Revolution

| About: Innodata Inc. (INOD)
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Businesses are constantly looking for ways to improve function and productivity. Properly managing costs is another important factor of a successful business as it allows you to recognize a larger profit. Innodata Isogen (NASDAQ:INOD) does both. It cuts cost and boosts productivity. Innodata specializes in creating and helping businesses manage information, digitally. This allows businesses to use software instead of documents that require the high cost of ink and can be lost.

Additionally, digital documents can be sent anywhere in the blink of an eye. This allows the business to have information travel faster, while cutting costs and not losing out on productivity. Other services include the making of e-books, which is a reliable source of growth for users of e-readers such as Amazon's (NASDAQ:AMZN) Kindle, Apple's (NASDAQ:AAPL) iPad, and Barnes & Noble's (NYSE:BKS) Nook.

Currently, the company is valued at $91.1 million and currently has a hold rating from analysts. Valuation-wise, the company has a price-to-earnings of 12 and a forward price to earnings of 9.15. The company is currently trading at a discount to its growth with a PEG of 0.65. Price-to-sales comes in a fair valued 1.05, price-to-book is at 1.81, and price-to-cash comes in at 3.19.

Innodata has minimal debt with total debt-to-equity of only .08. Meanwhile, cash per share is around $1.15, which gives the company a healthy current ratio of 3.39. Growth-wise, Innodata is expected to see earnings rise 60% this year, 567% next year, and 20% over the next five years.

Earlier last month, the company released its 2012 full-year earnings results. Total revenue came in at $86.6 million and earnings per share came in at $0.28. Total revenue was up 17% from 2011 full-year results and earnings per share saw a significant rise of 56%. This trend is forecast to continue at a much stronger pace due to the demand for Innodata's products and consulting services. This can be seen in the company's capital expenditures section of the earnings report. Management said that they spent $6.8 million (full year) to help expand its presence in Asia and its data processing unit. This will help the company be able to further its presence in Asia, which is a huge source of growth and will support the share price over the long term.

The bottom line here is that Innodata provides much-needed services to businesses in all industries. Earnings saw solid full-year results and analysts are expecting that trend to continue. Innodata's investment in Asia and innovation of its data processing products will help fuel growth. This is a great long-term holding as capital expenditures are expected to continue rising through the rest of this year and into 2014. Analysts are giving the stock a target price of $6, a significant upside potential from its current level of $3.66.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within 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.