DTLK – Q4 2006 Earnings

By: ispeculatornew
Date posted: 02.07.2007 (12:00 am) | Write a Comment  (0 Comments)

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DTLK – Datalink (Nasdaq) (Closing Price – $8.20)

Datalink reported very solid results today and I think the foolish dumping by some short term investors presents a good buying opportunity for those with a longer time horizon.

Datalink reported earnings of $0.19 (excluding a tax benefit) which is an eight cent improvement sequentially and a nine cent improvement year over year. It is also better than the profit of $0.18 they made a couple of quarters ago that sent the share price to a 52 week high of $12.50.

Revenues for the year were a 25% improvement over the previous year and Datalink reported earnings for the year of $0.57 (excluding a tax benefit). This was a huge jump from the profit of $0.06 they reported last year (this excludes a non cash charge; I am excluding these one time items to compare apples to apples).

Datalink didn’t provide guidance for the next quarter due to the fact that it is in the early stages of integrating MCSI, but I think there is no reason DTLK won’t continue to grow earnings and revenues in the next year.

If the share price continues to drop my recommendation would be to start to accumulate some more shares of DTLK. For those of you who are worried about the lack of clarity because there was no guidance issued I would recommend holding your shares until the next earnings report. Stocks with growing earnings and cheap valuations are hard to find and I believe there is no reason to sell DTLK. If they continue to grow revenues and earnings in the coming year I think the share price can easily double.    

Disclosure: I currently own shares of DTLK.

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