Stockgroup Information Systems Inc.      

Symbol: 
SWEB

Report Date: 
5/27/01

Price on 5/24/01: 
$0.17

Target: 
$1.07 (FY 2002)

52 Week Range: 
$0.09 - $.75
Business Description

Share Related Items

Recent Price (6/1/02) $0.155
Market Capitalization $2.14M
Shares Outstanding 13.8M
Float 8.1M
Daily Volume (3-month avg) 81K
Daily Volume (10-day avg) 32K
Delayed Quote  

Stockgroup Information Systems Inc. (OTC-BB - SWEB) is a financial media and technology company. It is a leading provider of private labeled financial content and software solutions to media, corporate, and financial services companies. Stockgroup employs proprietary technologies which enable its clients to provide financial data streams and news combined with cutting edge fundamental, technical, productivity, and disclosure tools to their customers, shareholders, and employees at a fraction of the cost of traditional internal methods. Stockgroup is also a provider of Internet communication and disclosure products for publicly traded companies. Its financial web site www.smallcapcenter.com is a state of the art online research center for the investment community.             

 Web site: www.stockgroup.com
Financial Summary

SWEB is dramatically increasing its distribution channels with the recent signings of four significant reseller partners, currently over 200 companies are implementing its products with the number expected to double in the next two years. Stockgroup has been sitting under Wall Street's radar for the last two years, however, the company has recently committed to aggressively telling its story over the next 6 months and is in the process of launching a million dollar investor relations program. As more investors begin to discover Stockgroup's operations, we feel strongly that the stock will appreciate accordingly and bring it in line with industry multiples which conservatively peg the stock between $1.00 and $1.60 per share. 

Stockgroup's Plan to Increase Shareholder Value:

  • Capitalize on explosive market demand by continuing to provide the right products at the best price.

  • Increase sales by leveraging the market strength of newly acquired industry leading reseller partners.

  • Maximize profitability by capitalizing on the low incremental costs of adding new customers.

Recent Financial Highlights Include:

  • The Company announced a net profit for Q1 2002 of $657,219 and $0.06 cent per share

  • The Company generated an EBITDA profit and positive cash flow for its third quarter in a row.

  • Received a speculative buy recommendation from analyst Michael Whitney, CFA of  Investrend with a $1.50 price target for year 2002, which represents an increase of over 800% from today's price. To view the full report, please visit SWEB Report  

  • Stockgroup just turned profitable and approximately 60% of its revenue is recurring with gross profit margins over 70%.

Stockgroup Information Systems Inc., (OTCBB: SWEB) recently entered the content management industry that is approximately 3 years old and is expected to explode into a $3 Billion industry over the next 2 years according to the Yankee group. SWEB has an experienced management team that has managed multi billion dollar companies and demonstrated early success in signing major licensing contracts with some of the largest companies in the world to include American Express, Price Water House Coopers, Citigroup, Mellon Financial Services and BCE emerges among others.

SWEB expects that increasing revenues resulting from current operations, combined with the fact that start-up costs are substantially complete will increase cash inflows going forward. Clients of SWEB  include the US Navy, Unisys, Prime Vest and Conseco's Internet/Intranet sites. Stockgroup provides these sites with its proprietary financial tools, including delayed and real-time quotes, interactive charting and customizable portfolios. These products are licensed to clients and delivered in a private-labeled format to the specifications of the customer.

Stockgroup's products have a demonstrated need, provide an on-going revenue stream and provide for high-margin returns. The lion's share of costs associated with the roll out of its proprietary technology is behind them and the company has taken steps to create a leaner balance sheet. While there are a myriad of content providers, SWEB has no true direct competition for its unique content pertaining specifically to small-cap stocks and the general market. 

Stockgroup appears to have successfully made the transition from a "dot com" to a leader in financial content and information management systems. With a burgeoning growth in revenue stream and a market cap of less than $2 million, SWEB appears to have been unfairly lumped in with other 'dotcoms' and subsequently oversold. We feel the transition to a financial content and software solutions provider has yet to be noticed by Wall Street and certainly not reflected in SWEB's current stock price. In the future we look for sequential revenue growth quarter over quarter, therefore, in our opinion SWEB offers the potential for enormous upside to investors electing to buy SWEB now. 

Analyst Summary

Stockgroup Information Systems

Symbol (SWEB-OTC:BB)

Industry (Technology - Software)

FORECAST

 

2001F

2002F

2003F

2002F Growth

2003F Growth

Net Sales

$2,846,784

$3,730,471

$7,306,369

31% 96%

Gross Profit

$1,779,587

$2,797,853

$5,479,776

57% 96%

Net Income

($1,233,430)

$253,676

$1,645,609

N/A 549%

EPS Fully Diluted

  (.06)

  .08

  .11

  N/A  38%

 
Projections by Quarter- 

Stockgroup Information Systems

Symbol (SWEB-OTC:BB)

Industry (Technology - Software)

FORECASTED EARNINGS

 

 

 1QA
2002 		2QF
2002

3QF
2002

4QF
2002

1QF
2003

2QF 2003

3QF 2003

4QF 2003

Net Sales

 $442,241 763,599 1,096,966

1,324,448

1,523,082

1,760,775

2,046,446

1,976,066

Gross Profit

 277,993

572,699

 822,747

993,336

1,142,311

1,320,581

1,534,834

1,482,050

Net Income

 657,219 55,289 97,715

185,012

289,628

421,926

468,275

465,780

EPS Fully Diluted

 0.06 0.00 0.01

0.01

0.02

0.03

0.03

0.03
 

Fundamental Opinion -  SWEB's forecasted sales and net income suggests the potential for tremendous future stock price appreciation from current levels based on the industry's average P/E multiple of 44. Assuming the company is able to meet its projections and trade inline with industry averages for the Computer and Technology Software sector, the stock's fair value for 2002 would be $1.07. When taking into account the staggering growth projected over the next two years and as SWEB begins to post numbers inline with projections we feel the stock price can easily reach its target in 2002. This figure can be considered conservative and allows SWEB to fall slightly short of projections and still have enormous upside. Should SWEB deliver on the projections or exceed them the stock could make colossal moves upward. Our target price represents a 1-year gain of over 600%. We strongly feel SWEB can make our target price during 2002. On 4/15/02 Stockgroup announced a profitable first quarter putting it well ahead of expectations in net income. Once the street is aware of SWEB's continuing profitable operations, we feel the share price will appreciate to trade between the 2002 and 2003 fair value prices. 

Projected Market Cap for 2002 $14,872,704 based on industry P/E of 44   Shares Outstanding: 13.8M Fair Value: $1.07

Projected Market Cap for 2003 $72,406,796   Shares Outstanding: 15.8M Fair Value: $4.58

Note: To meet the suggested target prices, the Company would have to trade at approximately the average 2002 P/E multiples of similar Companies in the computer technology and services industry and the Company would have to achieve earnings and revenue estimates provided by management.  A divergence either up or down from the projections could materially affect the target prices.

Analyst Reports
Coverage for Stockgroup Information Systems (SWEB) was initiated by Michael Whitney, CFA on March 7, 2002

Investrend -- 'Speculative Buy with 12month target of $1.50'

"Stockgroup has an experienced and dynamic management team with expertise in the internet industry, sales and marketing, finance, publishing and business management and development. We believe that if the company executes on its plan the shares could trade at $1.50 in 12 months." Michael Whitney, CFA, Investrend, March 7, 2002
 
Technical Analysis : 5/14/02
Short-Term Opinion: On a short-term technical basis, the trend is Neutral (sideways) and the stock is below its 50-day moving average at 0.23 which also confirms its Neutral (sideways) trend. The stock is extremely oversold according to the Stochastic indicator (15.68), so look for a possible rebound.

Long Term Opinion: On a long-term technical basis, the stock (SWEB) is trading below its 200-day moving average which implies it is in a negative trend.

The stock has support at 0.15 and 0.14. If the stock breaks down through support at 0.15 then it will probably continue lower to 0.14. The stock has resistance at 0.19 and at 0.20. If the stock breaks up through resistance at 0.19 then it will probably continue higher to 0.20. The 200-day moving average is at 0.19. This will also act as resistance. The stock has broken out of its long-term downtrend and is looking more positive recently. If the stock can form new support above 0.15 look for a rally to previous highs. The stock is extremely oversold according to the Stochastic Indicator (14.39), so look for a possible rebound soon. Confirm this with the Short-Term Opinion and Daily Opinion to keep from exiting prematurely

5/14/02 Enlarge chart
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Recent News
May 31, 2002

May 30, 2002

May 15, 2002

May 14, 2002

Apr 16, 2002

Apr 3, 2002

Mar 29, 2002

Mar 27, 2002 

Mar 26, 2002 

Mar 26, 2002 

Mar 19, 2002 

Mar 7, 2002 

Feb 22, 2002

Feb 19, 2002

Feb 11, 2002

Feb 4, 2002

Jan 28, 2002

Jan 14, 2002

Nov 22, 2001

Nov 15, 2001

Nov 8, 2001

Nov 7, 2001

Nov 5, 2001

 
Quarterly Financial Statement
Period Ending: Mar 31, 2002 Dec 31, 2001 Sep 30, 2001 Jun 30, 2001
Total Revenue $442,241 $504,138 $731,635 $516,019
Cost Of Revenue $164,248 $101,573 $208,300 $308,578
Gross Profit $277,993 $402,565 $523,335 $207,441
Operating Expenses
    Research And Development $18,498 $66,017 $25,229 $58,798
    Selling General And Administrative Expenses $455,600 $305,972 $463,390 $624,894
    Non Recurring N/A N/A N/A N/A
    Other Operating Expenses N/A N/A N/A N/A
Operating Income ($196,105) $30,576 $34,716 ($476,251)
Total Other Income And Expenses Net ($50,903) ($11,527) $238,745 $8,017
Earnings Before Interest And Taxes ($247,008) $19,049 $273,461 ($468,234)
Interest Expense $184,359 $70,319 $327,051 $102,024
Income Before Tax ($431,367) ($51,270) ($53,590) ($570,258)
    Income Tax Expense N/A N/A N/A N/A
    Equity Earnings Or Loss Unconsolidated Subsidiary N/A N/A N/A N/A
    Minority Interest N/A N/A N/A N/A
Net Income From Continuing Operations ($431,367) ($51,270) ($53,590) ($570,258)
Nonrecurring Events
    Discontinued Operations N/A N/A N/A N/A
    Extraordinary Items $1,088,586 N/A $58,701 N/A
    Effect Of Accounting Changes N/A N/A N/A $413,546
    Other Items N/A N/A N/A N/A
Net Income $657,219 ($51,270) $5,111 ($156,712)
    Preferred Stock And Other Adjustments N/A N/A N/A N/A
Net Income Applicable To Common Shares $657,219 ($51,270) $5,111 ($156,712)
Contact Information
Vancouver
500 - 750 West Pender Street, Vancouver, B.C., Canada V6C 2T7
Phone: (604) 331-0995 Fax: (604) 331-1194 Toll Free: 1-800-650-1211

Toronto
141 Adelaide St. W., Suite 1470 Toronto, Ontario, Canada M5H 3L5
Phone: (416) 363-6373 Fax: (416) 363-6399 Toll Free: 1-800-424-0289

San Francisco
Suite 1550, 111 Pine Street San Francisco, CA, USA 94111-5617
Phone: (415) 773-0450 Fax: (415)773-0451 Toll Free: 1-800-853-4295

Investment Inquiries and Corporate Finance: ir@stockgroup.com
General Inquiries: info@stockgroup.com
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