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Assessing GlobalSCAPE After Its Q4 And 2019 Numbers

Mar. 05, 2020 1:50 PM ETGlobalSCAPE, Inc. (GSB)3 Comments
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  • Firm reports record sales and profits in 2019.
  • Share price has not gained traction as a result though.
  • We assess whether the firm can continue its blistering growth rate.
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We wrote about GlobalSCAPE (NYSEMKT:GSB) early last year (April) and stated that shares (after printing a clear breakaway gap) were on the precipice of a major bullish run. We penned that piece when shares were trading around the $7.30 mark and debated whether we wanted to take on this momentum trade or not. As the technical chart shows below, shares went on a significant bull run during the past 12 months. Share price gains have recently come to a halt though despite some encouraging numbers in the recent fourth quarter as well as 2019 as a whole. The question now is whether the stock can get its mojo back. We clearly are dealing with an excellently run firm here.

For example, Robert Alpert (the newly appointed CEO) was upbeat on the recently announced fourth-quarter and 2019 annual numbers. The successful fiscal year was really cemented by the fact that management declared a whopping $3.35 special dividend at the back end of the year. Considering that shares are currently trading at $8.89 per share, that special dividend really exemplified how strongly operations are being run at present.

Top-line sales hit $3.6 million in the fourth quarter, which meant 2019 sales rose to $40.3 million. Top-line growth actually slowed below average in Q4 (13%) as full-year sales grew by 17% in 2019.

The real story though was GlobalSCAPE's growth in net profit in 2019. Net profit came in at a whopping $13.3 million compared to $3.7 million in the previous year. Management was quick to cite that net profit would have been even bigger if costs (such as the dividend and employee bonus) were taken out of the equation.

Suffice it to say, this massive growth in net profit (as well as recent sluggish share price action) has brought down the reported price to earnings


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Analyst’s Disclosure: I/we 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.

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