Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, cloud computing specialist ServiceSource International (Nasdaq: SREV ) has received the dreaded one-star ranking.
With that in mind, let's take a closer look at ServiceSource's business and see what CAPS investors are saying about the stock right now.
ServiceSource facts
| Headquarters |
San Francisco |
| Market Cap |
$1.18 billion |
| Industry |
IT consulting and other services |
| Trailing-12-Month Revenue |
$177.4 million |
| Management |
Chairman/CEO Michael Smerklo
CFO David Oppenheimer |
| Trailing-12-Month Operating Margin |
(2.4%) |
| Cash / Debt |
$73.4 million / $1.6 million |
| Competitors |
Accenture (NYSE: ACN )
Oracle (Nasdaq: ORCL )
SAP (NYSE: SAP ) |
Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.
On CAPS, 63% of the 35 members who have rated ServiceSource believe the stock will underperform the S&P 500 going forward. These bears include robertshrestha and All-Star TSIF, who is ranked in the top 0.1% of our community.
Just last week, robertshrestha listed several of ServiceSource's negatives: "Heavy insider selling, weak operating margins, high P/E, no obvious moat that I can see. Not much to like here."
In fact, ServiceSource sports a particularly lofty price-to-sales ratio of 6.6. That represents a clear premium to rivals Accenture (1.4), Oracle (3.9), and SAP (3.3).
CAPS All-Star TSIF elaborates on the ServiceSource bear case:
Insiders sold 9 Million shares the first week of August in a secondary, mostly insider offering ... can't blame them for cashing out, but they have more to dump and they relieved the float. Service Source is a "cloud" play with management services for subscription based company's. Anything with Cloud in it is getting some focus, both in speculating about growth potential and/or a takeover by those trying to expand their cloud reach. ...
IPO's are tougher to forward value, but at 7X book, negative cash flows and mixed margins, I think this one's a wait and see.
What do you think about ServiceSource, or any other stock for that matter? If you want to retire rich, you need to protect your portfolio from any undue risk. Staying away from dangerous stocks is crucial to securing your financial future, and on Motley Fool CAPS, thousands of investors are working every day to flag them. CAPS is 100% free, so get started!
Interested in another easy way to track ServiceSource? Add it to your watchlist.
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