Growing and Undervalued: NeuStar Inc.

From my watch list, today another growing and undervalued company. Let’s have a short view of NeuStar Inc. (NSR); that looks undervalued based on the Peter Lynch Price Value and the Discounted Cash Flow Model.

NeuStar Inc. (NSR)

Description:Â The company has a market cap of $1,226 M. It is a provider of real-time information services and analytics, using authoritative, hard-to-replicate datasets and proprietary analytics to help its clients promote and protect their businesses. It develops unique solutions using proprietary, third-party and client data sets. These solutions provide accurate, up-to-the-minute insights and data driven intelligence, enabling its clients to make informed, actionable decisions in real time, one customer interaction at a time. It also offers a broad range of innovative registry and other data services. The company operates three segments: Carrier Services, Enterprise Services and Information Services. Its marketing Services: provide marketing analytics and segmentation; provides scientific, Cloud-based solutions that enable marketers to analyze their customer base, and build granular, highly predictive segmentation in real time. This provides its clients with a consistent view of customer and prospect groups highly predisposed to purchase their products and services based on attributes such as demographics, geography and buying propensities.

Ratios: NSRÂ has a ROA of 9.99%, ROE of 28.30% and a ROC of 139.22%. All these ratios are better than 94% of other companies from the Global Telecom Services Industry.

Compared to the history of NSR, the year 2010 was the best year for the ROC when it reached a maximum level of 266.57%. The year 2005 was the best for ROA and ROE. ROA reached the maximum level of 22.36%; ROE reached a top level of 71.80%.

Financials: The company has a financial strength of 5 out of 10. Cash doesn’t cover debts enough, with a Cash-to-Debt ratio of 0.41, at worst levels of HCI history: the company has been out of debt for a while, then had an average Cash-to-Debt ratio that was fluctuating from 9 to 33.21 (at the end of 2010), then the ratio crashed below the 1.00. Anyway at these levels, it is outperforming the sector that has an average level of 0.29. Interest Coverage is 10.51 versus an industry median of 5.40.

Growth: Over the last five years, the company had a steady and strong growth rate (per share).

During the last 12 months all these ratios were still growing with EPS +11.70%, Revenue +18.70%, EBITDA +11.00%, Book Value +17.50% and Free Cash Flow +23.00%

Price: The stock is trading at $23 and over the last year, the price declined by -36%. It has some strong supports at $22Â and $20Â and the first resistance is at about $24. (take care of candlesticks of today March 26, 2015). This down trend started on August 1, 2013 and since that all-time high, the price dropped by 62%.

Currently, the price is down 33.13% from its 52-week high and up 14.32% from its 52-week low. The 200-day Moving Average price is $26.30.

The stock looks undervalued at current prices. The Peter Lynch Earnings Line gives a fair value of $57.8 with a current margin of safety of 59%; the DCF model gives a fair value of $78.57 with a margin of safety of 72%.

Dividend Yield: NSR has no Yield.

Gurus and Insiders : According to Guru Focus, NSR is held by PRIMECAP Management that holds 12.13% of Shares Outstanding, followed by Joel Greenblatt (2.28%) and Ronald Muhlenkamp (0.45%).

On 2014 Q4, Paul Tudor Jones and Jim Simons bought NSR and Jeremy Grantham sold out his position.

NSR has 93.0% of Institutional Ownership and 13.0% of Insiders Ownership.

Compounding : Over the last five years of data (starting from December 2010), the company has had the following compounding returns :