Valuation: Near-term P/E ratios are irrelevant While the stock trades on a pricey c 28x our FY14 earnings, this is due to heavy investment as the group moves to a pure cloud business model. We note that US pure cloud plays trade in the region of c 6-12x revenues and many are loss making. As we have pointed out previously, StatPro is a first mover in this space, and putting the foot on the accelerator now appears the right move to gain market share, fortify its competitive position and create economic value, in our view.
Valuation: Evolving into a scalable pure SaaS play In our view, the recent distribution deals with fund administrators and software providers put the group in a strong position to drive growth in FY13 and beyond. The stock trades on c 21x our maintained FY12 EPS falling to c 20x in FY13 and to 18x in FY14. The valuation reflects the strong growth potential from the highly scalable new cloud-based solutions, supported by the cash-generative traditional software.
Mark Adorian, a Non-Executive Director of StatPro, has purchased 100,000 ordinary shares in the data solutions provider at 95p each. The £95,000 transaction takes Adorian's total holding to just over 2.6m shares, equal to 4.31% of the issued share capital. At the start of this month StatPro revealed its profit before tax had declined by a fifth in the six months to the end of June following an exceptional charge as part of its restructuring during the period.
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