NEW YORK (TheStreet) -- Shares of Sapient Corp. (SAPE) closed down 0.08% to $24.65 after the securities litigation law firm Brower Piven commenced an investigation into possible breaches of fiduciary duty relating to the proposed buyout of the company by Publicis Groupe SA (PUBGY) .
On November 3, Sapient, a global marketing and technology services company, announced that Publicis Groupe would acquire Sapient in a transaction valued at approximately $3.7 billion.
The investigation seeks to determine whether Sapient's board of directors failed to satisfy their duties to the company's shareholders, including whether the board adequately pursued alternatives to the acquisition and whether the board obtained the best price possible for the company's shares of common stock, the law firm said.
The transaction is expected to close in the first quarter of 2015.
Separately, TheStreet Ratings team rates SAPIENT CORP as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:
"We rate SAPIENT CORP (SAPE) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, increase in net income, solid stock price performance and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 6.8%. Since the same quarter one year prior, revenues rose by 16.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
- SAPE has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, SAPE has a quick ratio of 2.14, which demonstrates the ability of the company to cover short-term liquidity needs.
- The net income growth from the same quarter one year ago has significantly exceeded that of the IT Services industry average, but is less than that of the S&P 500. The net income increased by 2.2% when compared to the same quarter one year prior, going from $22.79 million to $23.29 million.
- SAPIENT CORP reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, SAPIENT CORP increased its bottom line by earning $0.55 versus $0.41 in the prior year. This year, the market expects an improvement in earnings ($0.62 versus $0.55).
- Compared to its closing price of one year ago, SAPE's share price has jumped by 58.15%, exceeding the performance of the broader market during that same time frame. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
- You can view the full analysis from the report here: SAPE Ratings Report