Please ensure Javascript is enabled for purposes of website accessibility

Analysis: ePlus (PLUS)

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...

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

Ian Wyatt is an active investor, a well-regarded investment expert and an Internet entrepreneur. He is the Chief Investment Strategist at Wyatt Investment Research, publisher of Top Stock Insights and plays a leading role in each of the company’s investment newsletters and trading services. Ian founded Business Financial Publishing and Wyatt Investment Research in 2001, publishing investment newsletters for individual investors. Since then, the company has evolved into an Internet content company publishing e-letters, special research reports, newsletters, trading services and financial web sites.