Spear Point: GSE Systems Has 144% Upside

  • In a recent report, analysts at Spear Point Capital Partners explained why they think GSE Systems, Inc. GVP’s stock is currently undervalued and represents a "deep value investment opportunity."
  • The experts assured shares should be trading around $3.95, or more than 140 percent above the current market price.
  • GSE Systems, Inc. is, at the time of this writing, trading up around 2.41 percent at $1.70.
  • Spear Point analysts believe GSE Systems is quite undervalued and therefore offers a “deep value investment opportunity with materializing growth potential and profitability.”

    In fact, they noticed that the current stock price does not properly reflect the company’s actual market value, nor the $3.95 per share they believe the company could attain in a theoretical sale.

    Projections

    The company’s current enterprise value of $16.2 million trades at 0.29 times EV/Revenue, the experts went on to point out. Moreover, net cash ascended to $0.72 per share as of September 30, and revenue is expected to reach $57.8 million this year.

    Related Link: Stifel Upgrades Emerge Energy Services: Here's Why

    “At a reasonable valuation of 1x projected 2015 revenue (plus net cash), the Company would be worth approximately $3.95/share, or 144 percent above today’s market price,” the analysts explicated.

    Other Positives

    Other positive elements the firm sees in GSE include the new management team’s focus on growth, profitability and the reduction of “wasteful spending;” its alignment with shareholder value creation; two very significant wins that represent almost $40 million in new contracts; the extremely high switching costs the company enjoys of (across its product lines); the high level of expertise required to provide the solutions the company offers; and the fact that the business stands as an increasingly attractive M&A target.

    Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.

    Image Credit: Public Domain

    Posted In: Spear PointSpear Point Capital PartnersAnalyst ColorLong IdeasSmall Cap AnalysisPrice TargetTop StoriesAnalyst RatingsTechTrading Ideas

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