) is a Zacks #1 Rank (Strong Buy), but don't be afraid of the low
InnerWorkings, Inc. (InnerWorkings) is a provider of managed print
and promotional procurement solutions to clients. The Company's
software applications and database, PPM4, creates a solution that
stores, analyzes and tracks the production capabilities of its
supplier network, as well as quote and price data for print jobs.
Earnings Surprises Percentages Are Big
A penny or two of a beat may not seem like a lot, but when the
Zacks Consensus Estimate is only $0.05 or $0.06, the percentage
above expectations translates into 20% and 16% respectively. Add in
a $0.02 beat on a $0.07 estimate for a 28% outperformance and
attention is piqued. The most recent quarter, however, was just an
earnings meet, so hopefully the outperformance will soon continue.
The company recently noted that it will announce its fourth quarter
and full year 2011 results after financial markets close on
Tuesday, February 14, 2012. The Zacks Consensus Estimate is calling
for $0.10 this quarter and $0.11 next quarter.
Trading volumes are thin for INWK, a red flag for some. The stock
average volume of 157K shares is misleading in that recent volumes
have been much lower and just as an average would suggest, there
have been 200-400K days as well. Getting in and out of a position
in a stock with low volume is a little harder for larger investors
that can materially move the market with a large position. In an
effort to alleviate that, the company plans to host a meeting for
institutional investors and research analysts on Friday, February
24th. The analyst day will likely provide a roadmap for the future
and should increase exposure which could lead to more volume.
The top line continues to grow, and has often been just out of
reach of the Zacks Consensus Estimate. I point this out because the
price to sales metric has INWK trading at .7X. This is a
significant discount to the industry rate of nearly 2x. PE is a
different story, with INWK trading at healthy premiums to the
industry on both trailing and forward measures.
A smooth chart for INWK gives us even more faith in this Zacks #1
Rank (Strong Buy). Should the company provide a few more earnings
surprises, we would expect a stock in the mid teens.
Brian Bolan is the Aggressive Growth Stock Strategist for
Zacks.com. He is also the Editor in charge of the
Run Investor service
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