Overpriced acquisitions are far from a new phenomenon, but they’ve been especially prevalent in recent months. As a result, we’ve gathered some ideas about the various reasons companies ignore the evidence and continue to overpay for acquisitions.
Under even the most optimistic integration scenarios, we believe that Salesforce.com’s proposed acquisition of Demandware for $75/share or $2.85 billion represents an unacceptable transfer of wealth from CRM to DWRE shareholders.
Our call on Valeant (VRX) showed how dangerous it is to trust non-GAAP earnings because they cannot be used to cover true cash costs. For these reasons and more, Blackbaud Inc. (BLKB) lands in the Danger Zone this week.
Just when we think the market is becoming more rational and beginning to focus on fundamentals again we find a stock that proves that idea wrong. Once again, we’ve identified a business that fails to generate profits, uses “adjusted” metrics as “better representations of business”, and who’s stock price is up over 200% since late 2012. ServiceNow (NOW) is in the Danger Zone this week.
This week we’ve identified another highflying cloud company that exhibits many of the problematic traits we saw in DWRE and SPLK. Revenue growth can only support a stock for so long and this week’s Danger Zone stock, Marketo (MKTO) has plenty of room to fall.
Demandware IPO’d in 2012 based on plans to create shareholder value by providing e-commerce platforms for retailers and brands worldwide. So far, the plan is not working as the company’s profits have declined. Paradoxically, the stock price has climbed over 140% since its IPO. The stock is dangerously overvalued and earns a place in the Danger Zone this week.
Investors who aren't paying attention to the information disclosed in companies' financial footnotes are increasingly in danger of losing some of their investment.
Amdocs (DOX) is not the kind of software company that finds itself in the headlines. Instead of explosive revenue growth and founders fresh out of the dorm room, Amdocs offers investors an extremely well run business with an enviable market position.
Salesforce.com is a company that has grown rapidly in recent years. While some view their revenue growth as a good sign for investors, others are concerned about the company's mounting losses and falling cash flows. In this report, David Trainer and André Rouillard delve deeper into the financials of Salesforce.com and uncover some concerning trends that investors need to be aware of. From unprofitable acquisitions to hidden debt and liabilities, this report paints a different picture of Salesforce.com than the one many investors are used to. Read on to find out why the authors believe this stock could be headed for a fall.
Compared to its competitors, CALD has less scale, inferior profitability metrics, and fishy accounting to boot. The stock’s valuation is so high that our DCF model can hardly make sense of it. The stock seems to be trading largely on the hopes of an acquisition.
There are too many competitors out there for CRM to grow revenue and expand margins simultaneously to the extent that the market valuation already implies. Too much downside risk is in this stock.
The word “index” in an ETF label does not always mean that investors are getting the specific exposure they seek. Diligence on ETF holdings is necessary despite what the providers might have you believe. Below I dispel the following myths concerning index ETFs.