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NIC Inc provides government entities with services allowing more use of the internet to access government services and information. It markets to local, state and the federal government agencies and offices. Several of its web sites have won prizes from organizations tracking government websites. Its services include designing, building and operating web portals for government entities. NIC trades under the ticker symbol EGOV.
Attached is a PDF version of an SSG generated using ToolKit. In addition, an ITK file for import is attached.
 EGOV-RAM-2017717.ITK (5kb) downloaded 5 time(s). EGOV 2017-0717.pdf (46kb) downloaded 5 time(s).
The judgement calls and the rationale are as follows:
EPS growth rate – 10%. ValueLine does not estimate EPS growth. My estimate is based on the 5 year growth rate decreased a little for safety. Recent quarterly year to year growth was 10.5%. Trailing 4 quarters growth has been above 10% for the last 5 quarters. Analysts average 5 year growth from ICLUBcentral’s Equity Research Service (ERS) give a growth rate of 11%.
Sales Growth Rate – 7.5%. The recent quarterly sales growth rate was a bit low at 6.1%. The trailing 4 quarters growth rate has been between 7.5% and 10% for 3 years. ERS gives an analysts estimate growth rate of 5.8% for the next 2 years.
Projected High PE – The 10 year average high PE is 41.4. A graph from ERS shows the PE ratio has been decreasing recently. I chose a high PE of 30.
Projected Low PE – A similar analysis was done for the projected low PE, settling on 20.
Projected Low Price – 13.1. Using trailing 12 months earnings of .86 and a projected low PE of 20 gives a projected low price of 17.2. This is close to the 7/14/17 closing price of 18.75. I chose to use 13.1 as the estimated low price. This is approximately 30% below the current price. (30% is about the average loss in a bear market.)
My analysis gives an Upside/Downside ratio of 4.1, in the Buy range. This is contingent on the company continuing its historic sales growth. Over the long-term I believe there is a market for making government at all levels more efficient, accessable and accountable. There are up-front costs to this so the health of government budgets will play a role.
NIC was a recommended buy in the June 2014 Small Cap Informer newsletter of ICLUBcentral. It s still tracked by this newsletter. I recently opened a position in NIC in a personal account.,
Russell Malley
StockCentral Community Leader
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