ePlus (PLUS) provides IT integration and consulting services. Last quarter, sales grew nearly 10%. Meanwhile, net income soared 39% and earnings per share jumped 54%.
For the first half of fiscal 2014, the company reported earnings of $2.75 per share. If EPS continue at this level in the second half, the company could post EPS of $5.50, slightly more than the $5.42 consensus among analysts.
One of the many reasons I like ePlus is because management is aligned with shareholders. The CEO owns about 28% of the total shares outstanding. When you include the company’s other execs, management owns 50% of the company. As well, in the last six months, ePlus repurchased 600,000 shares of its stock, reducing the number of shares outstanding to just 7.4 million. As we saw with last quarter’s financial results, the lower share count helps boost earnings per share.
ePlus shares are attractive, even after the recent jump. The stock trades at just 12.5x this fiscal year’s consensus EPS estimate. That’s a healthy discount to the S&P 500 and other technology-consulting firms. My target price for ePlus is $85, based on a reasonable P/E multiple of 15–16x this year’s estimate. Buy ePlus (PLUS) below $70.
Ian Wyatt, Ian Wyatt’s Million Dollar Portfolio, www.100kportfolio.com, 866-447-8625, November 12, 2014
