3. Hong Kong-based CDC Software ( CDCS) provides a suite of enterprise software applications.
The company reported non-GAAP revenue of $54.2 million and non-GAAP earnings per share of 25 cents for 2010 third quarter, exceeding consensus estimates. Commenting on the results, Peter Yip, CEO of CDC Software said in a press release, "With an impressive 35% improvement in third quarter Total Contracted Backlog of $133.9 million compared to $99.3 million in the third quarter 2009, and increases in our recurring revenue for the third quarter, we expect to accomplish our previously announced goal to develop recurring revenue streams reaching closer to 70% of total revenue over the next few years." At $7.03, the stock is trading at an attractive price-to-earnings multiple of 6.6, while Epicor Software ( EPIC), Lawson Software ( LWSN), Salesforce.com ( CRM), Oracle ( ORCL), NetSuite ( N) and SAP ( SAP) are trading at PE multiples of 17.1, 18.8, 108.5, 15.7, 199.0 and 16.6, respectively. In addition, CDC Software's EV-to-EBITDA ratio of 4.3 is well below its competitors. Of the four analysts covering the stock, three recommend buying and one suggests holding. Analysts polled by Bloomberg expect the stock to gain around 49% over the next 12 months with a consensus target price of $10.5.