Spear Point: GSE Systems Has 144% Upside

Spear Point analysts believe GSE Systems is quite undervalued and therefore offers a “deep value investment opportunity with materializing growth potential and profitability.”

In fact, they noticed that the current stock price does not properly reflect the company’s actual market value, nor the $3.95 per share they believe the company could attain in a theoretical sale.

Projections

The company’s current enterprise value of $16.2 million trades at 0.29 times EV/Revenue, the experts went on to point out. Moreover, net cash ascended to $0.72 per share as of September 30, and revenue is expected to reach $57.8 million this year.

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“At a reasonable valuation of 1x projected 2015 revenue (plus net cash), the Company would be worth approximately $3.95/share, or 144 percent above today’s market price,” the analysts explicated.

Other Positives

Other positive elements the firm sees in GSE include the new management team’s focus on growth, profitability and the reduction of “wasteful spending;” its alignment with shareholder value creation; two very significant wins that represent almost $40 million in new contracts; the extremely high switching costs the company enjoys of (across its product lines); the high level of expertise required to provide the solutions the company offers; and the fact that the business stands as an increasingly attractive M&A target.

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.