SPRO: SmartPros; Potential wide discount to normalized earnings

SPRO provides training solutions for accounting/finance, legal, engineering, securities , insurance, and information technology for (IT) professionals. click to  view corporate website

SPRO has an enterprise value of only 12 million with a current price of $2.84 or market cap of 14 million as of 08/06/10. Enterprise value to sales is .67 or 3.76 in sales per share. Sales and general administrative expenses are 47% of revenue.

The current quarterly sales were weak down 17% YOY. Management believes that the negative top line results are not indicative of further weakness. Management did announce a quarterly .01 dividend and a stock buyback with 149,000 shares purchased in the first quarter. Their cash position remains strong at $6.4 million as of March 31, 2010 or 1.30 per share.

The average annual EBITDA from 2005 to 2009 was $1,626,000. The EBITDA for 2005 to 2009 was 1,430,000; 2,270,000; 1,920,000; 1,470,000 ; and 1,040,000 respectively. If the company can revert back to the average annual EBITDA from 2005 to 2009 they would report a ~14% EBITDA to enterprise value. This goal is achievable given the additional business acquisitions over the 2005 to 2009 period. The 14% EBITDA to EV and richer valuation should help move the stock significantly higher from its current price closing price of $2.85.

52 week stock price range is 2.30 to 5.19

click to view the current stock price and begin additional research

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