If you take a look at Motley Fool's CAPS community, Perficient
Perficient helps its customers design portals, e-commerce systems, and mobile applications on platforms from players like Oracle
As Perficient grows its business, the operating leverage has continued to improve, with EBITDA margins at a healthy 20%. So with more cash flows, the company can crank up acquisitions.
In September, Perficient agreed to shell out $20 million for BoldTech Systems, which provides high-end consulting services for major customers like AT&T
On the conference call, Perficient management was upbeat about its M&A strategy. With the crumbling of private equity, there hasn't been much competition for deals, and the valuations are looking attractive, with deals at lower EBITDA multiples. Keep in mind that Perficient trades at about 19 times EBITDA, so there is lots of opportunity to leverage earnings from M&A deals.
Going into Q4, management sees more momentum, giving guidance of $56.3 million to $62.1 million on revenue. What's more, the long-term prospects look promising if the company should continue to buy up rivals. In light of all this, I can certainly see why the stock has won the undivided attention of some CAPS investors.
Fool contributor Tom Taulli, author of The Complete M&A Handbook, does not own shares mentioned in this article. He is ranked No. 7,130 out of more than 73,000 investors in CAPS. Duke Energy is an Income Investor pick, Microsoft is an Inside Value selection, and Disney is a Stock Advisor recommendation. The Fool has a disclosure policy.