Thursday, August 9, 2007

Interactive Intelligence

Interactive Intelligence is a NASDAQ listed security that has been trading in a range between $10.38 and $23.10 over the past year. With 17,370,990 shares outstanding, a recent price of $19.33 gives a total market capitalization of $333,696,702. While there are certainly larger companies, Interactive Intelligence has definitely earned its place in the pack. Last year, Interactive Intelligence created $0.56 in earnings for every share outstanding.

Interactive Intelligence is currently priced by the market at 0.00 times last year’s earnings. Many trading multiples around the world are quite attractive these days, but don’t be fooled. A Price to Earnings ratio of 0 simply means that the security didn’t make any money last year.

With a share price under $50 a share and earnings per share below $1 a share, Interactive Intelligence is unlikely to be an interesting value proposition. Consistent earnings are the key to high valuations and this security is well on its way.