NEW YORK, May 20, 2004 (PRIMEZONE) -- The following is an investment opinion issued by Investrend Research Syndicate:
Investrend affiliate Fundamental Research Corp. is raising its fair value estimate to C$1.40 from $1.20, and maintaining its BUY rating on the Datec Group Ltd. (TSE:DGL) after a review of the company's 2003 and most recent quarterly results. It is also changing its risk rating from "4 -- Speculative" to "3 -- Average Risk" on the company's improved capital structure and profitability.
The following are further highlights of the complete update report; the full report, including important disclosures, is available free at www.fundamentalresearchcorp.com and http://www.investrendresearch.com
For 2003, DGL exceeded Fundamental's revenue and EPS expectations. Datec reported 2003 sales of $48.6 million, up 15% from 2002; however, Q1 2004 sales are down over the same period last year due to the deferral of certain goods and services sales contracts to later in the year. The analyst notes that, "The company's capital structure has improved significantly with almost all the convertible debt being paid down with equity." He expects debt to capital to decline from 63% in 2001 to about 22% by 2005. Given the improved capital structure and profitability, the analyst changed his risk rating on the company from "4 -- Speculative" to "3 -- Average Risk". The research note comments that DGL remains significantly undervalued relative to its peers. The average Software and Services IT company trades at 29 times EPS versus just 7.8 times for DGL based on the analyst's 2004 EPS estimates. After reviewing industry comparables, the analyst raised his fair value opinion from $1.20 to $1.40.
Fundamental Research Corp. is an affiliate of Investrend Research and both subscribe to the "Standards for Independent Research Providers." The subject company has paid a research fee of $3,500 upfront.
Complete information about this company is available at the company's InvestorPower page at http://www.investrend.com/company/list.asp?sPathParam=yes, and the full report is available at: http://www.fundamentalresearchcorp.com/PDF/dgl2003q12004.pdf and www.investrendresearch.com. Investors are advised to read disclosures carefully before trading in the equities of any enrolled company.
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