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Small-Cap Awarded Five-Year U.S. Government Contract, Stock Hits 52 Week High
By: AllPennyStocks.com News
March 3, 2010
The paperless society has been a lofty goal since offices and businesses became computerized in the 1980s. At times, it’s seemed unattainable, like world peace. But it hasn’t stopped some companies in America to continue to aim for its creation, and at least one has gotten the Federal government in its corner in its quest.
Marlton, New Jersey-based systems integrator Emtec Federal, a subsidiary of Emtec, Inc. (OTCBB:ETEC) came out with just such news in early March, announcing a five-year purchase agreement with the Department of Agriculture (USDA) valued at $82.5 million, to furnish the department’s International Technology Services (ITS) arm with servicing and support for its 40,000 employees and their computer networks.
Under this contract, Emtec Federal will provide “procurement and other ancillary services to support the USDA’s migration to a paperless business environment and to establish and maintain a consistent, common and compatible technical infrastructure” within the organization. ETEC is also slated to provide the same kinds of services to those responding to disaster situations and aid in homeland security.
ETEC, whose founding dates back to the early 1960s, aims to help clients improve IT systems and processes -- to transform Information Technology into an investment that returns true value to those clients. Emtec Federal has been busy of late, garnering contracts with other branches of the Federal government, most recently in late February with the U.S. Air Force to provide Samsung flat-panel display monitors and Lenovo ThinkPad X200 Series Notebooks, a contract worth approximately $5 million.
The company’s links with Federal government programs and departments has proven lucrative. The latest quarter for which ETEC reported earnings showed total gross profit increased 19.9% from $8.8 million to $10.5 million in the same quarter the year before, and a jump to $2.5 million in operating income from $1.9 million in the prior-year quarter. Net income leaped to $1.4 million from $1 million in the comparable quarter, or nine cents per share from seven, an improvement of about 28%.
Stock in this company, which functions all over the world, hit an intraday high of $1.67 on the day of the USDA announcement, smashing the previous 52-week high of $1.35 set late in February. It’s a far cry from the gully of 35 cents in which ETEC found itself last summer. The products and services it provides to keep the Federal government functioning – and the rewards coming as a result – should grab the attention of bargain-seeking small-cap investors, before the stock price possibly heads much higher.
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