Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of health-care IT company Computer Programs & Systems
So what: Fueled by a 30% revenue surge, CPSI posted a second-quarter profit of $0.72 per share, versus the average analyst estimate of just $0.55 per share. The shares are hitting new 52-week highs on the market-beating report and have risen more than 75% over the past year, suggesting that Mr. Market expects even better things to come.
Now what: I wouldn't bet on this momentum just yet. While CPSI's short-term certainly looks great (management expects more solid growth in the current quarter), its red-hot stock price and, more importantly, forward P/E of about 30 still make this value hound a little nervous. Of course, with zero debt, solid returns on equity, and earnings expected to grow an average of 18% in each of the next five years, CPSI is certainly worth keeping an eye on.
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