Tech Feud: Informatica vs. Microsoft

BOSTON (TheStreet) -- Technology stocks are back.

The industry produced strong quarterly earnings after a rebound in business spending. Mega-caps Intel (Nasdaq: INTC) and Microsoft (Nasdaq: MSFT) beat analysts' earnings estimates by a margin of 20% and 10%, respectively. Their stocks have gained 4% and 5% since the quarterly releases. Small-cap data integrator Informatica (Nasdaq: INFA) exceeded estimates by 9%, and its stock is up 14%.

Informatica designs and sells data-integration software, helping companies simplify their technology infrastructure and reduce costs. It is a fast-growing player in the industry, serving financial-services firms, health-care companies and public-sector enterprises. Second-quarter net income increased 45% to $17 million, and earnings per share climbed 31% to 17 cents. Revenue rose 33%.

Informatica recently announced a partnership with storage giant EMC (NYSE: EMC), which will sell Informatica's Lifecycle Management and Master Data Management products through its EMC Select program. Despite a market value of just $2.8 billion, Informatica does business with 84 of the Fortune 100 companies, demonstrating the relevance of its offerings. It inked repeat business with 351 customers during the quarter and added 68 new clients.

Recent success has pushed the stock to a premium. Informatica sells for 43 times trailing earnings and 24 times forward earnings, reflecting 53% and 17% premiums to software-peer averages. However, the stock's PEG ratio, a measure of value relative to predicted long-run growth, of 0.7 signals a 30% discount to fair value. Its enterprise value to EBITDA ratio of 20 is expensive, but less than that of fast-growers Citrix (Nasdaq: CTXS) and Salesforce.com (NYSE: CRM).

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