Monday, October 5, 1998
InterVoice Inc.
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Phone: 972-454-8000
Website: www.intervoice.com
Price (10/2/98): $21 1/2
HOW DID IT DOUBLE?
Press "one" followed by the pound key for today's Daily Double.
Thank you.
InterVoice has spoken, and shareholders like what they have heard. After three consecutive outstanding quarterly reports, the call center specialist has prompted a wave of calling on its own -- investors phoning in their buy orders.
With strong sales and earnings growth driven by the domestic surge in Year 2000 upgrades and an increase in sales of Windows NT-based systems and network services applications, shares of InterVoice have rung up huge gains.
BUSINESS DESCRIPTION
InterVoice is a supplier of automated call processing systems, with the number of installed systems totaling nearly 10,000 in 50 countries.
The Dallas-based company's products are used in inbound and outbound call centers to provide customer service at a fraction of what manned phone calls would cost.
FINANCIAL FACTS
Income Statement
12-month sales: $116.9 million
12-month income: $7.3 million*
12-month EPS: $0.51*
Profit Margin: N/A
Market Cap: $318.2 million
(*Excludes non-recurring items)
Balance Sheet*
Cash: $6.3 million
Current Assets: $53.5 million
Current Liabilities: $30.2 million
Long-term Debt: None
(*As of May 31, 1998)
Ratios
Price-to-earnings: 42.2
Price-to-sales: 2.7
HOW COULD YOU HAVE FOUND THIS DOUBLE?
When upside earnings surprises come one after another, some pretty spectacular things can happen. Over the last three quarters, earnings per share estimates have been running a few sizes too small at $0.05, $0.16 and $0.23 respectively. The company has responded in those quarters with showings of $0.16, $0.21 and $0.30 a share, respectively.
Until mid-April, First Analysis analyst Brian Boyer was looking for earnings of $0.45 a share this year and $0.59 next year. Three strong quarterly reports later, the projections have been raised substantially.
Companies that show earning surprises are rarely given the proper accolades. An analyst doesn't want to simply throw all past number crunching out the window. The income forecasts are usually raised slightly, but only to a comfortable degree for the jaded.
That is why a Fool should definitely keep an eye on our Workshop screens of earnings busters to find possibly tomorrow's InterVoice a few quarters early.
WHERE TO FROM HERE?
First Albany, which joins First Analysis, Piper Jaffray, and Ladenberg Thalman as the only four firms that follow InterVoice, has also raised its earnings estimates. It is now looking for $1.14 a share this year and $1.33 next year. At a recent price of $24 a share and sporting a debt-free balance sheet, the company appears to be a bargain even if the earnings surprises end with the August quarter.
No streak lasts forever, but it seems as if InterVoice might have at least another surprise up its sleeve. While product and maintenance agreement sales have been strong stateside, recently rising 37%, overseas revenues have been falling. However, the company now expects to turn the international division around. Revenue growth both here and abroad could add an undetected kick for the latter half of fiscal 1999.
So InterVoice might not be ready to hang up the receiver just yet -- and it may continue to reward the investors who heeded the ringing that started shortly after the end of the February quarter.
-Rick Aristotle Munarriz
([email protected])