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Extraordinary Business Record a Highlight of Peerless Systems Corp. (PRLS)

The Net Profit Margin of this stock, on a Trailing Twelve Months Basis, has touched almost 98%. Return on Average Equity during this period exceeds 88%. The stock has opened in July 2008, trading very close to its 52-week low of $1.69. This has brought the Price to Earnings Ratio to just 1.27. Why does the stock market shun such a profitable stock?

Radical business environment changes have riddled this small-capital corporation from El Segundo, CA. It is in the business of providing software and components for multi-function copiers in a network. Brand owners of this genre of equipment have backward-integrated, depriving the corporation of historic revenues. A revamped board has seized executive control of the business, and entered into novel deals with former clients. This has brought in waves of cash, albeit in a non-recurring manner.

Revenues have dropped annually by about 20% during the Most Recent Quarter. This indicates that the company must continue to transform its business. The good news is that the balance sheet is now sound, and the management has plenty of cash to deploy productively. The company continues to spend a third of revenues on research & development. Loyal stock investors can therefore look forward to a continuing flow of new systems relevant for digital imaging and networking. This is a large field with plenty of scope for technical innovation. The management is confident of future business prospects.

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