Perficient Stock: If This Happens, Investors Could Have 50% Upside
Perficient Missed the Party But It’s Not Too Late
The risk-on trade made a grand comeback in September, with the Russell 2000 charging ahead six percent, easily outperforming the S&P 500 and the Nasdaq.
But, while the indexes appear to be bursting higher, there are many stocks that have not followed in the excitement, including small-cap technology play Perficient, Inc. (NASDAQ:PRFT).
The company has been in a “show me” situation for the majority of the past decade, but it offers investors a decent risk-to-reward contrarian trade.
Perficient, Inc. seems to be in the right space, developing digital technology solutions that are aimed at helping Global 2000 companies with their digital solutions.
PRFT stock is included in both the Russell 2000 and the S&P SmallCap 600 indexes, which means it has institutional support, despite its failure to ramp higher.
Compared to the S&P 500 and Russell 2000, Perficient stock has underperformed, with a tiny 0.05% move over the last year. However, it is rallying of late, with a 13.66% year-to-date move to a 52-week high of $19.90 on Thursday.
The rally doesn’t imply that the coast is clear for PRFT stock, as evidenced by the chart over the past five and 10 years, when Perficient stock only traded as high as $24.75 in October 2007.
Chart courtesy of StockCharts.com
The two-year chart of PRFT stock shows a bullish rounding bottom with a targeted move towards $22.00.
Perficient, Inc.’s daily stock chart points to the emergence of a bullish golden cross in late July at around $18.00 on a rising relative strength indicator (RSI) and moving average convergence/divergence (MACD). The technical outlook is encouraging, but investors have been disappointed in the past.
Chart courtesy of StockCharts.com
Fundamentals Improving for PRFT Stock
Perficient, Inc.’s revenues have risen in three consecutive years from $373.33 million in 2013 to $486.98 million in 2016. The compound annual growth rate (CAGR) was 9.8% during this span.
The positive trend for Perficient, Inc. is expected to continue, but at a lower rate than the CAGR. The expected revenue growth is a mere 1.5% this year, but it could be as high as 9.7% in 2018 should Perficient manage to meet its high estimate at around $543.0 million. (Source: “Perficient, Inc. (PRFT),” Yahoo! Finance, last accessed October 5, 2017.)
The earnings picture is positive, but it has been largely flat and deprived of any meaningful growth. That said, things are looking brighter.
Perficient, Inc.’s earnings growth is estimated to be 13.9% in 2017 and 14.7% in 2018. The company’s earnings-per-share (EPS) trend has been moving higher over the past 90 days, which generally coincides with a higher share price.
Analyst Take
The fundamentals and technical picture for Perficient stock are positive, and suggest that things are looking up for frustrated investors who have been waiting patiently for some good news.
PRFT stock has missed out on the eight-year bull market, so hopefully it can jump on.
Perficient, Inc.’s forward multiple of 14 times is fairly attractive, and an improvement over the 48-times trailing multiple.
Even expanding the multiple to a reasonable 20 times could drive Perficient stock toward the $28.00–$30.00 level.
