So revenue growth is slowing quite rapidly too. How are they going to grow into that 55 PE ? I’m just wondering what I’m missing?
Well, here are the thoughts of, admittedly, a beginner at evaluation (who appreciates both the fact that you felt one of my arguments supporting the stock was worthy of consideration, as well as your thoughts and comments adding a grain of salt to my enthusiasm and the enthusiasm expressed by management.) (And of course, keeping my “beginner” status in mind, you can also take the thoughts added here with a grain of salt.)
First, admittedly, there does appear to be a slowing down of current revenue growth. However, even so, as reported by TheStreet regarding the most recent earnings release, revenue growth came in higher than the industry average of 4.8%. Secondly, overall, in spite of current quarterly slowdown, I do believe revenues are still on a fairly good growth trajectory. Let’s look instead of only at the latest quarterly growth, at the recent annual revenue growth, as well.
5 year annualized growth rate: 24.4%
Also note, the company has zero debt, lots cash on hand, 12% cash flow growth rate.
Granted, EPS has not been salutary, and this is certainly a concern (how much is going to compensation rather than bottom-line?) However, a good portion (IMHO) is going towards future growth.
LogMeIn bills itself as an innovation company. Their business is based not only on each year improving their product and spending on marketing to gain customers, but also on expanding breadth and depth of product base. You mentioned in one of your posts some of the new products discussed in the recent earnings transcript. Join.me their collaborative platform is the biggest growth driver at present. This spring they introduced video and white-boarding to join.me. Also the one-touch video phone connection. These (again IMHO) are very innovative products that have only been just newly introduced to market. The white-boarding allows you in a video conference to create a white-board via your ipad, draw and write on it, add a photo to the board, and to share it during the conference so that others can also contribute and add to that board. Interactive collaboration. It can also be saved or shared or sent later. All this with ease of use, quick connection, and low cost. This is only one of the newer products recently introduced.
In one of the presentations I listened to when doing my report for Neil’s Investment Analysis Club board, management was talking about Xively and also the security and password management programs and the potential future market for each. Yes, this is kind of story stocky, in that it’s enthusiasm for future success, not a discussion of current profit. But I think it’s easy for anyone to understand and acknowledge how IoT is only going to continue to grow, how business is going to continue to shift their focus (or increase and enhance their focus) on connectivity, and how the importance of quick connection, easy connection, safe connection, all areas in which LogMeIn focuses and excels are only going to grow, and probably exponentially.
This month, LogMeIn was named a finalist in the 18th Annual Technology Leadership Awards by Mass Technology Leadership Council “in recognition for the company’s continued growth, innovation and success,” in the following three areas:
• Public Company of the Year
• Innovative Technology of the Year, Internet of Things (Xively)
• Innovative Technology of the Year, Mobile Technology (Rescue Lens)
Some of the former awards won:
• Best Cloud-Based Technology for Mobile [2014, GSMA Mobile World Congress]
• The Worlds Top 10 Most Innovative Companies in IoT [2014, Fast Company]
• Finalist in 2015 MITX Awards for Best in B2B Tech for password manager
I think all of these factors will contribute to future growth and are part of the reason for the current enthusiasm of analysts who in spite of slowing revenue in recent quarters and lack of exciting EPS currently have, in majority, upgraded the stock after recent quarter. (And of course, the fact that they almost always beat expectations, 24 out of the past 26 quarters, I think it is now, doesn’t hurt). I also believe these these are some of the arguments that go towards making (still) a company to keep a watch on, even if tempered, by needing, also, to keep a close watch on the numbers and looking (or waiting) for signs of a better return for investors.
Company Mission: Simplify how people connect to each other and the world around them.
Because: Simplifying how people connect creates endless possibilities.
Or: When everything is connected, anything is possible.
okapimoon—>Who still likes the company, but hasn’t yet invested in it.