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Recent Deals Inspire Confidence In Simulations Plus, Inc.

|Includes: Simulations Plus, Inc. (SLP)

With stock markets pushing to new highs, the opportunities for profitable investments are harder to come by. There are plenty of mergers taking place across the market at this time and those companies able to go with the market's momentum are those most likely to profit in the weeks ahead.

Simulations Plus, Inc. (NASDAQ: SLP) is one such company that is striking deals with a number of partners and this should further cement the company's already solid fundamentals.

Background

Operating out of Lancaster, California, Simulations Plus, Inc. is the leading developer of modelling and simulation software for the pharmaceutical, biotech and industrial chemical industries. Simulation's software helps scientists predict the results of therapies and tests. Indeed, all of the top 20 pharmaceutical companies in the world license the company's software in some form. There is no doubt that Simluations Plus holds an important role in the pharmaceutical industry.

Outlook

Recently, Simulations Plus entered into a five year research collaboration with the US Food and Drug Administration (FDA) in order to develop predictive in vitro-in vivo correlations (IVIVCs). Crucial to this is Simulation Plus' GastroPlus software and this collaboration is made more powerful now that the company has terminated a license agreement with TSRL Inc.

As well as this deal though, Simulations Plus has entered into several partnerships with leading universities and CROs in China, Korea and Japan. There is now great potential to teach the software and provide courses to hundreds, if not thousands of biotechs.

Fundamentals

As well as the number of deals going through at SP and the optimistic outlook presented by management, the financials also indicate that Simulation Plus is in a great spot for investors.
Notably, Simulations Plus offers an impressive current ratio of 16.40, owing to the fact the company has no debt on its books whatsoever. Also of note, Simulations Plus offers an impressive gross margin of 83 percent, net profit margin of 28.80 percent and a dividend yielding 3.36 percent.

Price Chart

Looking at the price chart, Simulations Plus may have dropped 14 percent from its April high, but the stock is still around 20 percent higher than at the start of the year. The recent drop has given investors a great opportunity to get in and this has not gone unnoticed.

Indeed, insider transactions are now showing at 42.26 percent as company management takes the opportunity to buy up more of its stock.