Perion Network (PERI), mcap=$998m, price $22.23 vs $21.24

$PERI pitch:
– Advertising technology with above-average growth prospects is priced as one with below-average prospects.
– Perion has a growing ad search business expanding at double-digits, with a solid anchor tenant in Bing / $MSFT advertising (35% of revenues).
– Sitting on $350 million of cash, and actively looking for more M&A, which could drive additional growth.
– Perion has achieved some pricing power and margins are improving.
– Increased ROE and ROA signal the existence of a franchise.
– Set to grow earnings at a mid-teens rate in the intermediate term.

$PERI Valuation:
– Trades at a reasonable valuation of 7.4x EV/EBITDA and a P/E of 14.5x.
– That’s below the S&P500 valuation for a business with better quality and growth prospects.

Exp. gain: Not specified.

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