Quant Snapshot: Sandvine (TSX:SVC)

When your business is growing by leaps and bounds, it can be easy to lose sight of the big picture. For mobile network operators worldwide, their current situation is a double edged sword. Because everyone, including your grandmother, now has a Blackberry or an iPhone, the congestion and data capacity crisis has come to a head. Manage this situation well and you could access a fortune. Falter and another competitor with a cute name and cartoon logo takes your place.

That’s where Waterloo’s Sandvine comes in. Sandvine sells technology to service providers that gives them a window into the world of this chaotic traffic. The buzz-phrase in this space is “deep packet inspection”, a technology that enables wireline and wireless networks to target data-overload issues. Sandvine’s growth is clearly part of a larger trend; Infonetics Research estimates that deep packet inspection will grow from just over $200 million in 2008 to a more than $1.5 billion business by 2013.

Sandvine’s Q2 2010, reported in early July, was The Company’s fourth consecutive quarter of revenue growth. We break down the numbers in an updated “Quant Snapshot”.

1. Price to Sales: 2.84 x sales

As of Wednesday, August 11th Sandvine had 136,541,835 million shares outstanding. The price, as of the same date, was $1.63. This gave The Company a market capitalization of $222.56 million. In the trailing four quarters Sandvine posted sales of $78.5 million.

2. Cash to Market Cap: 41.1%

As of Q2, 2010 (May 31st, 2010) Sandvine had a Cash and Short Term Investments position of $91.57 million. The Company’s Market Capitalization, as of Wednesday, August 11th was $222.56 million.

3. Debt to Market Cap: Zero

As of Q2, 2010 (May 31st, 2010) Sandvine had a Long Term Debt position of zero.

4. Three Year Growth: 45.6%

Revenue was $31.66 million in FY 2006. This grew to $68.85 million in FY 2009.

5. Enterprise Value to Sales: 6x Sales

Sandvine’s Enterprise Value is $130.99 million, based on a market capitalization of $222.56 million, plus Long Term Debt of zero, minus Cash and Short Term Investments of $91.57 million. In the trailing four quarters, sales totaled $78.5 million.

All financial information about Sandvine is gleaned from

their filings with the System for Electronic Document Analysis and

Retrieval (SEDAR)

All calculations are based on The Company’s closing share price as of

close August 11th, 2010: $1.63

Sales from trailing four quarters: $78.5 million

Cash and Short Term Investments as of Q2, 2010 (May 31st, 2010): $91.57 million

Shares outstanding: 136,541,835