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FCGI- (recommended
to subscribers
on 2/23/04)
BOUGHT
at $5.96 SOLD
at $13.57
On
February 19th 2004 First Consulting Group, a provider of
outsourcing and consulting to the health related industries, reported
fiscal 4th quarter 2003 net revenue of $64.8 million which was down 6%
from the $68.9 million reported in the 4th quarter of 2002. Net loss
was $7 million or 27 cents per share. Included in the loss was a $3.6
million restructuring charge and a non-cash tax valuation charge of
$5.5 million. Excluding these two charges FCGI earned a pre tax profit
of $1.2 million which was ahead of prior guidance the company had
given. FCGI has taken several steps during 2003 to bring down costs.
SG&A expenses were down sequentially, and as well, year over year.
SG&A expenses are targeted at 20% in the 1st quarter and then 18%
in the 2nd quarter. Also, gross margins were up in the 4th quarter to
32.3% from 29.1% in the 3rd quarter. During the conference call the
company stated that "in most areas the pipeline is the strongest it has
been in almost 2 years". Because of the strengthening health care
delivery market, which comprises two-thirds of FCGI's business, the
company expects improving revenue and earnings throughout 2004 and
expects to reach profitability in the first half on a GAAP basis.
FCGI has $62.6
million in cash and investments or $2.41 per share and the company
carries no debt. Book value is approximately $3.18 per share and the
stock trades at a low .5x sales.
In the chart below
you can see that FCGI broke it's almost 2 year downtrend in the second
half of 2003. The stock has also put in an inverted head and shoulders
bottoming pattern which is circled below. The stock is undervalued as
well as not being very far from it's 2003 low of $4.30 and at the same
time fundamentals appear to be improving.
1/05/07-
SOLD AT $13.57 FOR A GAIN OF 128%. DURING THE SAME TIME PERIOD THE
NASDAQ
WAS UP 22%.
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