CTCH Investment Analysis Report & Stock Research, CommTouch Software Limited

CommTouch Software Limited (CTCH)

CTCH Stock Report

2-Year Price History

View Larger CTCH Chart
NASDAQ:CTCH
$3.78
(4/16 4:00PM)
-2.3%
Open$3.9 Mkt Cap$92.7 Million
High$3.9 52Wk High$4.30
Low$3.75 52Wk Low$1.78
Volume27,715 Avg Vol 10D23,400

A Word Of Caution

While we stand by our ratings methodology for long term value investors, sometimes smaller companies will be more volatile in terms of revenue, cash earnings, and other fundamental factors. CommTouch Software Limited (CTCH) is such a stock. Because many micro-caps are lightly traded their stock price can fluctuate because of a single large trade. Also, there is less analyst coverage of such micro-caps and therefore less information from which to base our ratings.

While this company may not get as much press because of its small size, please take a moment to look at the RazorWire feed on the right hand side of the report. Any time CommTouch Software Ltd. is mentioned on business television or influential blogs a clip of that will be displayed. This helps to bring you up to speed on any major issues they are facing right now, both positive or negative.

Therefore, (and as always), check additional sources and available information regarding CTCH before making an investment decision.

Ockham's Rating/Recommendation Summary

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CTCH Revenue

Cash earnings is the most important factor in our analysis, but it goes without saying that if a company cannot produce sales then there is no ability to generate cash flow. By that logic we look very closely at revenue numbers as our second most important factor in valuing a company's stock. We have established reasonable Price to Sales per share ranges based on historical data of the last 10 years. For, CTCH the high and low end of the Price to Sales per share ratios are 27.53x and 5.77x respectively.

Notice that CTCH's current Price to Sales per share ratio is 6.08x, which is quite a bit below what we consider a normal Price to Sales ratio for this stock. Given normal conditions and a price of $3.83, CTCH is 64% below where we would expect to see it. This will beneficially factor into our final analysis of CTCH as it is not often that this stock sinks to these levels.

CTCH Cash Earnings

Cash (and the ability of a company to generate it) is a pivotal analysis at Ockham Research. With CTCH, we have found that we don't have as many years of positive Cash Earnings as we would like in order to run an analysis. When a company like CTCH has had several years of negative Cash Earnings mixed in with their positive years, it can be difficult to really get a good analysis of their potential. At Ockham, we always advise that Cash is key to any investment, so investors should consider the lack of positive years available as a signal that other types of analysis may need to be more heavily relied upon in CTCH's case.

CTCH Dividends

A strong dividend payment history is looked upon as a favorable characteristic on a company’s future and potentially can receive a positive Ockham rating. That being said, we don't require dividend payments for company's whose management has elected to forgo them entirely. As far as our investing methodology goes, it is not necessary to pay a dividend in order to get a favorable rating, so as for right now CTCH gets a neutral rating for the dividend portion of the model. As you can see, we are not receiving historical dividend information from our data provider on CTCH at this time.

Peer Comparison

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CommTouch Software Limited Industry Grouping

(4/15/2010)
Company Ticker Market Cap (Ml) Latest
Price
Price/Cash Earnings Price/Sales 5-Yr. Rev.
Growth Rate
5-Yr.
Avg. ROE.
Current 10-Yr. Range* Current 10-Yr. Range*
Peer Company Averages (not including CTCH) 12.36 1.57 » 88.09 1.65 0.31 » 13.42 35.82% 27.67%
*10 year range does not include current year values
Subaye, Inc. SBAY $109.3 Million $16.40 5.88 0.48 » 95.59 2.29 0.19 » 41.18 101.87% 13.67%
HealthStream, Inc. HSTM $99.2 Million $4.56 4.94 1.82 » 62.00 1.65 0.60 » 4.52 23.40% 12.40%
Innodata Isogen, Inc. INOD $95.7 Million $3.77 9.33 2.81 » 167.83 1.28 0.35 » 5.66 8.02% 12.43%
CommTouch Software Limited CTCH $92.7 Million $3.87 15.96 6.42 » 75.04 6.08 0.23 » 161.00 58.40% 11.64%
EasyLink Services International Corp. ESIC $76.6 Million $2.63 5.14 2.45 » 49.29 0.92 0.39 » 7.50 48.79% 11.18%
Imergent, Inc. IIG $76.5 Million $6.67 36.50 0.29 » 65.75 2.11 0.04 » 8.23 -3.00% 88.65%

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Key Fundamentals

CTCH - CommTouch Software Limited Fundamentals
Price (4/16 4:00PM) $3.78
Volume (4/16 4:00PM) 27,715
Last Close Price $3.87
10 Day Average Volume 23,400
13 Week Price Range $3.58 - $4.29
52 Week Price Range $1.78 - $4.30
LTM Revenue $15.2 Million
 
Shares Outstanding (12/2009) 24.0 Million
Market Capitalization $92.7 Million
Shares Held By Institutions 573,522
Institutional Holders 7
% Shares Held By Institutions 2.40%
Earnings Per Share (EPS) $0.20
P/E Ratio 19.40
Book Value Per Share $0.79
 
Gross Margin 88.40%
Annual Dividend 0.00
Dividend Yield 0.00%
Beta 1.00
Fiscal Year Ends December

About CommTouch Software Limited

CommTouch Software Limited is considered to operate in the Technology sector. They specifically operate in the Internet Service Providers business segment contained within the Internet industry.

The company is a provider of email defense and URL filtering solutions to enterprise customers and OEM distribution partners.