{"id":309,"date":"2018-04-23T21:19:49","date_gmt":"2018-04-23T21:19:49","guid":{"rendered":"http:\/\/www.cheapertrader.com\/?p=309"},"modified":"2018-04-23T21:27:20","modified_gmt":"2018-04-23T21:27:20","slug":"scisys-plc-low-p-e-potential-upside","status":"publish","type":"post","link":"https:\/\/www.cheapertrader.com\/index.php\/2018\/04\/23\/scisys-plc-low-p-e-potential-upside\/","title":{"rendered":"Scisys PLC – low P\/E, potential upside?"},"content":{"rendered":"

Scisys PLC’s (SSY: AIM) <\/span>share price \u00a0is currently up 50% year on year, and currently has a market cap of around \u00a345 million. The company appears to be seriously growing revenues rapidly, but will the\u00a0share\u00a0price continue to rise?
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\nScisys chart up 50% YoY<\/strong><\/span><\/p>\n

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Scisys is essentially a\u00a0developer of technology services, applications and solutions.\u00a0\u00a0The company’s\u00a0customer base is widely varied\u00a0and includes some major names in business, including the likes of Vodafone, the BBC, Siemens and Pets at home. Government accounts are also part of the company’s customer base, with the company being able to secure work\u00a0from the\u00a0 Environment Agency, the Ministry of Defence, and the European Space Agency. Main revenue streams have been classed into\u00a0 Enteprise Solutions & Defense (ESD), Media & Broadcast (M&B), Annova, Space and Xibis. More insights into each of these streams can be viewed from the company’s most recent set of results<\/a>.<\/p>\n

The positives of Scisys<\/strong><\/span>
\nThe company’s\u00a0most recent set of results were released last month<\/a> for FY 2017 and\u00a0appear to be\u00a0very impressive indeed.<\/p>\n

Let’s take a look at the numbers:
\n– \u00a0Operating profit of \u00a34.6 million
\n– Revenues up 25% YoY to \u00a357m
\n– Dividend is 2.16p (on share price of 155p)
\n– Year end order book \u00a391.3m, up 41%
\n– Significant contract wins were achieved in all divisions<\/p>\n

The first thing that stood out about this for me was the P\/E ratio being 10. For software companies, the\u00a0P\/E ratio is normally much higher than 10<\/a> across the industry. At a P\/E of 10, Scisys does immediately appear to be valued much lower than its peers.<\/p>\n

In addition, another thing that stood out was that both the year end order book and the company’s revenues grew significantly (41% and 25%). If the company can continue this sort of growth, the \u00a34.6m in profits could potentially increase very quickly and\u00a0with a P\/E of even 10, the\u00a0share price could significantly increase as a result.<\/p>\n