PKCY under the radar
« on: Today at 01:08:44 PM »
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1. Profile
Park City Group, Inc (PTCY). develops and markets patented computer software that helps its retail customers to increase their sales while reducing their inventory and labor costs: the two largest, controllable expenses in the retail industry. The technology has its genesis in the operations of Mrs. Fields Cookies, co-founded by Randy Fields, CEO of Park City Group, Inc. Industry leading customers such as The Home Depot, Victoria's Secret, The Limited, Anheuser Busch Entertainment and Tesco Lotus benefit from our software. For more about Park City Group (OTCBB:PKCY) visit our website at
www.parkcitygroup.com.2. Technical Analysis
2.1. Long Term
PCTY is trading around the same levels it was when it entered the public market in final 2002, which is a positive sign for a penny stock.
2.2. Medium Term
The stock has been trading between a support level of $0.038 and a resistance level of around $0.105. It hit the resistance level today and as a consequent is falling back down. This may present an attractive buying opportunity, if the fundamentals are supportive.
2.3. Short Term
Technically, an entry in the $0.075 - $0.080 range may be appropriate. Let's study a bit of the fundamentals.
3. Fundamental Analysis
3.1. Latest News
• Barrow Street Research Initiates Coverage of Park City Group
I've read the text, it was instructive. The company expects fiscal 2006 (which is less than 2 months from over) to be a profitable year. Management has vast experience and prior success. The analyst that wrote the text received $5,000 from the company to do it.
• Oracle Corporation Signs Licensing Agreement with Park City Group
This business is obviously positive, but the press release shares no details. Management seems to pursuit an increase in shareholder value.
• Market Pulse Announces Corporate Profile on Park City Group, Inc.
Here the CEO says the following: «We have already booked more business in the first half of this fiscal year than we did in all of last fiscal year and we look forward to a strong second half of the fiscal year as well.''»
• Park City Group Substantially Strengthens Balance Sheet
After this conversion the company will have 351 million shares outstanding, so the market cap is 351,000,000*$0.089 = $31.24 M. The press release also says this: «The Company earned $1.8 million on $4.8 million of revenue in the first six months of this year and this reduction in debt will have a meaningful impact on net income going forward as well. We are a much stronger company as a result.."» $1.8 M for the first 6 months may mean $3.6 M or more for the full fiscal 2006. This means the earnings multiple is 8.68.
3.2. Number of Shares Outstanding
There's some increase on the share count but for a good reason, to reduce interest expense.
3.3. Working Capital
PKCY certainly needed to strengthen its balance sheet. It still looks weak, with just $1.32 M in assets.
3.4. Revenues
The company had erratic revenue numbers in the past. Revenue growth isn't stable. But 2006 is shaping up to be the best year ever for the company. Will it continue from here? Well, the news and outlook is certainly positive.
3.5. Net Income
Perhaps assuming the second half of fiscal 2006 will be as profitable as the first half is a long shot, but the CEO himself says the second half has been «strong». If this estimate is true, PKCY would be currently trading at about 9 times earnings, and software companies trade at 35 times earnings on average.
4. General Overview
If estimates are right PKCY may be trading at a significant discount. But the company has been quite irregular and the balance sheet is still weak. I enjoy the company's products and it's client base. Also the recent agreement with Oracle is promising (but the company didn't disclose details on the deal).
I'm not running to buy the stock just yet but I'm interested. I'll keep it under close eye and I'll update this thread with new information.
5. Disclosure
www.otcbbcoverage.com is a new website that focus on covering OTCBB traded stocks. From now on this will be the PTCY's thread for serious investors that like to go deep into a company's fundamentals and technicals. You're invited to post questions or comments, which will be answered by our team of analysts and traders. Thank you