Manhattan Associates slowsdown this week !!

Manhattan Associates (MANH) was seen trading down for most part of the week. The stock on Friday slumped for the fourth consecutive day; also the stock was thinly traded throughout the week. This turnaround is observed after a wonderful performance shown by the stock since last three months or so during which it touched the 50$ mark first time after December 2000. The stock on Friday closed at $47.53 down 1.33%.

Manhattan Associates is a Small Cap Technology company providing software based supply chain solutions to retailers all around the world. The company’s clientele includes some famous brands like Jockey, Puma, Starbucks and many more. It is headquartered in Atlanta, GA and has offices in South America, Europe, Asia and Asia Pacific.

The reason behind Manhattan Associates’ success in such a short time is because of the Platform it provides to clients for availing customized services; their three major platforms include SCOPE(Supply Chain Optimization Planning through Execution), SCALE (Supply Chain Architected for Logistic Execution) and MORE (Manhattan’s Optimized Roadmap to Excellence). These platforms provide inventory, transportation lifecycle and various other optimizations which eventually help their clients to cut down on costs as well as labor.

 Moreover the recent quarterly as well as annual results have been very impressive. On last two occasions they have beaten Analyst’s expectations to gather some trust from investors and because of which it has been such a high flying stock of 2012. Comparing the last three years’ annual revenue figures it can be observed that they have been progressive enough to keep up the pace. The annual revenue for the year ended 31^st December 2011 was about $329million and Manhattan Associates is expecting the Revenue Figures in the range of $363 to $370 Million in 2012.

Among the various steps they are taking to lead in innovation is that, they spend the highest percentage of their Revenue in Research and Development compared to its competitors, it’s because of this that they have come so far in an industry that is dominated by big names like Oracle, JDA and salesforce.com. However if we go by the numbers, Manhattan Associates has a Forward PE of 19.01 which is reasonably high for investors who believe in Fundamentals, also the PEG ratio is 1.9 which indirectly indicates that it is slightly overvalued but does not totally reject it from being a good investment.

However given that the stock has already gained 16% in last 3 months,  it is now experiencing some resistance at $50 level which has made investors a little more cautious.