NEW YORK (TheStreet) -- Data analytics specialist IHS (IHS) will report fiscal second-quarter earnings results Tuesday before the opening bell, and though the stock is up more than 8% this year, besting the broader averages, it requires a high frustration threshold to hold these shares.
Shares of the company Englewood, Colo.-based company, which provides information and data mining to governments and businesses, have been all over the map so far this year.
And if the abrupt resignation of the company's Chief Executive Scott Key serve as an indication, IHS has more challenges ahead, beyond its recent struggles with revenue and margins.
Complicating matters, IHS stock is expensive, trading at 42 times earnings, which is twice the valuation multiple of the average stock in the S&P 500 (SPX) index.
Even when compared with the relatively expensive iShares North American Tech-Software ETF (IGV), which trades at a price-earnings ratio of 30, the premium price of IHS shares stand out even more. And the exchange-traded fund is home to prominent software and Internet stocks such as Microsoft (MSFT) and Salesforce.com (CRM).
So when assessing IHS, whose fiscal 2015 earnings are projected to decline almost 1% from fiscal 2014, its reasonable to ask, where is the value?
Granted, the market for data analytics and other forms of information -- the type that help businesses make smart decisions -- is projected to grow in the next couple of years, according to research firm IDC.
This would make IHS an interesting play, especially with its access to government contracts.
At the same time, there are also tons of better-run businesses that are competing. The likes of Accenture (ACN) and IBM (IBM) are two examples, and they don't come with the sort of operational risk that is sparked by a sudden leadership change.
On June 2, IHS said that its Chairman, Jerre Stead would assume the CEO role, replacing Key, who resigned -- as the report says -- due to personal reasons.