PC Mall, Inc - Aggressive Growth

PC Mall, Inc (MALL) said is operating income more than doubled last quarter and led to better than expected earnings. Estimates are moving higher for this Zacks #1 Rank (Strong Buy) and they are expanding into a hot new industry.

Company Description

PC Mall is a direct marketer of technology products and services for small and medium sized businesses. They also service government, educational institutions and individual customers under several brands.

Topped Estimates

On May 10 PC Mall reported quarterly results that showed at 16% increase in sales, to $336 million. Gross profit grew 14%, to $43.5 million. Operating income jumped 1.47%.

That led to earnings per share of $0.11, which was 2 cents higher then the Zacks Consensus Estimate. PC Mall has now beaten expectations in 3 of the past 4 quarters.

Expanding into Hot Industry

PC Mall put out another press release that day that said it is expanding into the daily deal business through one of its subsidiaries. For better or worse, the success of Groupon in this space has down plenty of newcomers. OnSale, the subsidiary, is relying on its more than 10 years of ecommerce experience to add value that others can’t match.

Estimates Move Higher

Analysts raised estimates on the news and we saw the Zacks Consensus Estimate for this year move 3 cents higher, to $0.97. Next year’s rose 7 cents, to $1.20. Last year PC Mall made $0.61, so the growth rates are expected to be 59% and 24%, respectively.

Valuations

Shares of MALL are trading at about 10 times forward estimates and with a PEG ratio of 0.7, both showing a solid value play. MALL is going for just barely more than the book value.

The Chart

While the stock has been a bit week lately, if you take a step back and look at the long-term earnings trend, it looks pretty bullish. Shares have pulled back but relative to the sharp increases in earnings estimates, it looks like a buying opportunity.

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