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What: Shares of business commerce solutions provider Ariba
So what: Revenue rose 21% in the first quarter to $131.5 million, driven by a 59% increase in its network business. Net income rose from breakeven a year ago to $2.3 million, or $0.02 per share. Adjusted earnings per share were $0.25, $0.03 ahead of estimates.
Now what: Stock-based compensation accounted for most of the adjustment, so I think the adjusted earnings number is overstated. Even with the adjusted earnings number, the stock is trading at 35 times 2013 earnings, a steep price in my eyes. I'm going to stay away from this stock partly because of the high price and partly because management is giving away nearly all of its profits in the form of stock to employees.
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Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.
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