Investorfile Blog

Category
Investorfile.com (47)
Ergoresearch Ltd. TSXV: ERG (1)
Posera Ltd. TSX: PAY (2)
Gatekeeper Systems Inc. TSXV: GSI (1)
AirIQ TSXV: IQ (3)
Intouch Insight Ltd.TSXV: INX (2)
Intrinsyc Technologies Corp. TSX: ITC (7)
Quorum Info. Tech. Inc. TSXV: QIS (6)
Sangoma Technologies Corp. TSXV: STC (7)
Avante Logixx Inc. TSXV: XX (6)
The Caldwell Partners Int. Inc. TSX: CWL (8)
Questor Technology TSXV: QST (8)
Titan Logix Corp. TSXV: TLA (8)
RDM Corporation TSX: RC (12)
IWG Technologies TSXV: IWG (4)
WANTED Technologies (7)
DDS Wireless International Inc. (6)
Radiant Communications (4)
Galvanic Applied Sciences Inc. (3)
Archives
November 2017
October 2017
September 2017
August 2017
July 2017
June 2017
May 2017
April 2017
March 2017
February 2017
January 2017
December 2016
Mar
26
Quorum Information Technologies keeps on doubling, with the stock up 300%
Posted by: Gerry Wimmer
3/26/2017
|

TOP IDEAS: From 20 to 40 to 80 cents per share, Quorum Information Technologies’ (TSXV: QIS) stock price could double again due to key growth trends.






Investorfile's share price accumulation target of $0.40 for Quorum Information Technologies was reached on August 17, 2015. For the record, we do not revise share price targets for our Investorfile Top Ideas – Small Cap Value Stocks. We have positioned our blog to be one of the first providers of a pragmatic perspective of a small cap company stock's potential worth, where there may be uncovered value that has been largely overlooked by the investment community.


The Investorfile blog made a bold statement in September 2015 in our post about Quorum Information Technologies Inc. We suggested that the stock price could double from its then $0.40 level (See: Quorum Information Technologies stock price could double again).That post was written a short time after the stock had already doubled in value from $0.20, the share price when we first recommended the Company’s stock (See: Quorum Information Technologies delivers value for auto dealerships and small cap investors) to our list of Top Ideas. Since both blog posts, Quorum’s share price has doubled twice and trades 300% higher in value.

Quorum Information Technologies Inc. (TSXV: QIS - $0.80) develops, markets, sells implements and supports its proprietary enterprise management software solution called XSELLERATOR™ for auto dealerships using a Software-as-a-Service (SaaS) pricing model. XSELLERATOR is a comprehensive dealership and customer management solution (DMS) that automates, integrates and streamlines every department within an auto dealership to save on costs while generating the auto dealership more services revenue. Today, XSELLERATOR software is used in about 325 dealerships (rooftops) in Canada and the USA.

XSELLERATOR is a fully integrated DMS system with key competitive advantages focused on improving the auto dealership’s customer’s experience with its embedded Customer Relationship Management (CRM) system, which is quickly gaining market share at the expense of antiquated software competitors. With its seamless end-to-end dealer processes (sales, service, parts, accounting), the XSELLERATOR is fully integrated with Original Equipment Manufacturer (OEM) data – the Major Automaker brands.

Over the last three years to service more auto dealerships, Quorum has made considerable investments with the ongoing strategic integration of its XSELLERATOR software with additional OEM automakers, including Toyota /Lexus/ Scion in Canada, Ford/Lincoln for a total of 19 automaker brands to date. The Company expects to integrate eight more brands into its software over the next two years. In Canada there are a total of 2,589 dealerships and 19,576 dealerships in the USA, across all of the automaker brands.

The Company’s revenue model includes several components. The biggest portion is generated from SaaS support revenue, which averages about C$34,000 per dealership annually. Other revenues are earned from new installs of XSELLERATOR software (C$50,000 per dealership) and training. Today Quorum’s quarterly revenue run exceeds C$3 million (C$12+ million annually). The vast majority of the Company’s revenues are recurring.

Based on a recent investor presentation (posted on the Company’s website), we feel there are several key growth trends that support the upward momentum in Quorum’s stock price. They include:

1. Capturing a bigger market opportunity: Ongoing strategic integration with additional Automaker OEMs is significantly expanding the total addressable market of auto dealerships for the XSELLERATOR software both in Canada and the USA. This means more potential revenue growth for Quorum. Currently the Company’s revenues are growing at rate of 10-15% annually.

2. Penetrating larger customers: As Quorum continues to integrate new automaker OEMs they gain access to large multi-OEM Dealer Groups who have ownership of many auto dealerships and brands, thus leading to bigger sales opportunities. Currently 24% of the Company’s total revenues are generated from auto dealerships owned by dealer groups.

3. Growing revenues per customer: The average recurring support revenues per dealership generated by Quorum are up by 20% in the last two years, which should increase further as Quorum’s software offering expands with new modules.

We acknowledge that the stock price of Quorum has doubled twice in value already and that current stock valuation is no bargain based on historical financial results. But, based on the above growth trends, Quorum’s business is showing a great deal of momentum. We feel that the Company is still in the early stages of a multi-year growth trajectory and the business will accelerate even faster 2017. Given this, there is a strong argument that the Company’s stock price can still move progressively higher over time and even double in value once again (unless Quorum is taken over prior.)

Quorum announced that the Company will be releasing its 2016 annual results on April 20 (after market close) and will hold their first ever investor conference call on the following day. We expect the results will show that revenue growth was strong year over year. We note that last year the Company made significant investments in R&D and hired many new employees to meet future demand. As such, we anticipate earnings growth may be minimal in 2016 but start accelerating in 2017 and beyond.

The Company has approximately 52 million shares outstanding.

Quorum Information Technologies website: www.quorumdms.com

Author Ownership Disclosure: TSXV: QIS - Yes


Read Disclaimer:

This article is for informational purposes only. This article is based on the author's independent analysis and judgment and does not guarantee the information's accuracy or completeness. The information contained in this article is subject to change without notice, and the author assumes no responsibility to update the information contained in this article. The information contained within this article should not be construed as offering of investment advice. Those seeking direct investment advice, should consult a qualified, registered, investment professional. This is not a direct or implied solicitation to buy or sell securities. Readers are advised to conduct their own due diligence prior to considering buying or selling any stock.

Investorfile is not engaged in an investor relations agreement with Quorum Information Technologies Inc. nor has it received any compensation from Quorum Information Technologies Inc. for the preparation or distribution of this article.

The author of this article has acquired and may trade shares of Quorum Information Technologies Inc. through open market transactions and for investment purposes only.

|

ENTER YOUR COMMENT:

Name:
E-mail: (will not be published)
Comment: (500 Char. Max)
Verification Code
Code Image - Please contact webmaster if you have problems seeing this image code If you can't read the word, click here to load a new word
Enter the Word exactly as it is shown in the box above:

FREE. Sign up for blog post alerts

Latest Tweets

Latest Blog Comments

Gerry: Thanks for small cap stock suggestions over the past 5-years. Your record is very impressive and your analysis has been excellent over the years. I think small investors (and fund managers) should pay much more attention to your work. I look forward reading your blog over the next 5-years!