TERADATA CORP. $57 (New York symbol TDC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 168.3 million; Market cap: $9.6 billion; Price-to-sales ratio: 4.4; No dividends paid; TSINetwork Rating: Average; www.teradata.com) makes computers and software that capture and store large amounts of a business’s data, including its sales and inventory. Teradata then analyzes this information and identifies buying habits and trends. This helps its clients make better business decisions.
The company continues to add to its expertise in cloud computing, which involves storing data and software on one or more centralized servers. Users access these programs or files over the Internet, or through some other computer network.
For example, in January 2011 Teradata paid $525 million for privately held Aprimo, which uses a cloud computing model to sell software and services to over 150,000 clients. Aprimo’s products help its customers evaluate their marketing campaigns.
In April 2011, Teradata paid $259 million for the 88.8% of Aster Data Systems Inc. that it did not already own. Aster makes software that quickly organizes and analyzes large amounts of data.
Contributions from these acquisitions helped push up Teradata’s revenue by 23.6% in the three months ended June 30, 2011, to $581 million from $470 million a year earlier. Earnings rose 39.2%, to $103 million, or $0.60 a share, from $74 million, or $0.44 a share.
The company spent $41 million (or 7.1% of its revenue) on research in the latest quarter, up 13.9% from $36 million (or 7.7% of revenue) a year earlier.
Teradata’s strong balance sheet gives it lots of room to further increase its research spending and make more acquisitions.
It holds cash of $682 million, or $4.05 a share; its long-term debt of $295 million is just 3% of its market cap.
The stock has more than doubled since NCR Corp. (New York symbol NCR) spun Teradata off as a separate company in October 2007.
Teradata now trades at 26.8 times the $2.13 a share that it will probably earn in 2011. That’s still a reasonable p/e ratio in light of the fact that the company’s services help its clients cut costs. That makes them less likely to cut their spending on Teradata’s services during economic downturns.
In addition, Teradata gets 55% of its revenue from maintenance and other services. That cuts its risk.
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