Espial Group Inc ESPAF

Q2:Continued Fundamental Progress Strong 2 half Primed

[93Darkhorse93]

I am always amazed at the gross profit margin that they are able to put up of 73%. Once the product rollouts begin in size in the second half of 2016 the operating leverage will be huge. The ARRIS acquisition looks better the more I can see the value add and expansion of services as it rounds out the Espial offering and the revenue per client expansion and makes each client relationship more sticky. Not concerned about the slight Rev miss as the business just begins to ramp into the 2nd half of 2016. With the 46M of cash on the B/S so only paying 38M for the business is real cheap given sales trajectory and client relationships already in place. The business is in a much better place today than it was a year ago but yet the stock is half the price. I like the setup looking to add tomorrow.

[JonathanJSmith]

If you look at their income statement, they've invested heavily in their R&D (almost double to that of the previous year) and the CFO mentioned (on the CC) that they'll invest more heavily into R&D with the integration of the Arris team. Next Q, you can figure $6MM (incl. ~$2MM from Arris) in revs and still a $3-4MM cash burn, if not more. You can expect the stock to trend lower

[Joseph_K]

You seem to be the only one that gets what is happening here Jonathan.   Although, to be fair, even with your implied cash burn rate, I doubt the stock falls to $1.50 in 2016.   However, I wouldn't be surprised to see a new 52 week low when tax loss selling peaks.   That will probably be a perfect time to buy.