"Leader in email delivery positioned for rapid revenue and profit expansion; Current dividend yield of 9.1%."
"Email delivery is the largest and fastest growing segment of email marketing: SMTP's low-cost high-quality customer service preserves high margins, creates barrier to entry."
"Revenue has grown at a 61% CAGR (2008-2012); Profit margin (ttm) of 22%; ROE (ttm) 119%; Dividend us 33% YoY."
Email delivery is the largest & fastest-growing segment of email marketing; SMTP’s low-cost, high-quality customer service preserves high margins, creates barrier to entry.
Revenue has grown at a 61% CAGR (2008-2012); Profit margin (ttm) of 22%; ROE (ttm) 119%; Dividend up 33% YoY.
Clients diversified across many verticals and countries; focused sales efforts expected to accelerate growth; RedChip is projecting 54% and 75% revenue growth in 2014 and 2015, respectively.
Product enhancements expected to increase market opportunities and average revenue per customer.
$2.5M financing agreement with Dutchess Opportunity fund provides access to capital for business improvements
SMTP is a leading provider of services to facilitate email delivery, with a focus on marketing email delivery, but also supporting bulk and transactional sending, reputation management, compliance auditing, abuse processing and issue resolution. The Company’s services provide customers with the ability to increase the deliverability of email with less time, cost and complexity than handling it themselves.
We believe that the market is significantly undervaluing SMTP, given our expectations of accelerated revenue growth (54% in FY14, 75% in FY15) and the fact that this is accomplished while maintaining robust dividends ($0.08 per share in FY14E, $0.18 per share in FY15E). Applying a P/E multiple of 25x to our FY15 EPS estimate of $0.21 gives us a value of $5.25. Discounting this total back 1.5 years at a 10% discount rate gives us a target price of $4.55.