Why Tangoe's Shares Did a Victory Dance

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Tangoe (NAS: TNGO) finished up more than 12% after an early gain of over 10% today, following a third-quarter earnings report that beat the Street's EPS expectations.

So what: Tangoe's third-quarter adjusted EPS, at $0.13, was a good deal better than the $0.09 analysts had expected. Going forward, the company's full-year EPS guidance also beats the Street's expectations, with a narrow $0.48 to $0.49 range easily clearing the $0.46 EPS bar set by analysts for 2012. Tangoe also released full-year revenue guidance today for 2013, and the $188 million to $191 million range hit the sweet spot of the consensus $189.3 million analysts had projected.

Now what: Although Tangoe is unprofitable on a GAAP basis, its free cash flow has been on the rise for some time. However, earlier trailing 12-month FCF results put Tangoe's P/FCF at a rather high 40.8. Tangoe is clearly improving its business, and its stock remains well below heights reached this summer. Does that make Tangoe a bargain now that forward momentum appears to be picking up? It's quite possible, but I'd like to see more specificity on 2013's bottom-line guidance before jumping in.

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The article Why Tangoe's Shares Did a Victory Dance originally appeared on Fool.com.

Fool contributor Alex Planes holds no financial position in any company mentioned here. Add him on Google+ or follow him on Twitter, @TMFBiggles, for more news and insights. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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Richie Marini

Tangoe is currently under investigation for securities fraud by a couple of firms that have shown that they are using investor money to fuel M&A and acquire revenue which they then use to falsify organic growth. This is the same Ponzi scheme Madoff used (minus the M&A) -- I should know I'm a former employee of both. I'm one of the original core developers of the billingIT TEM platform which was an open-source based high volume distributed real-time computing grid for TEM processing. Tangoe had acquired it, then stopped development of it and tried to replace it with a bunch of glued together commercial software which didn't pan out. Then they tried to bring it back without any luck. They are not a technology company and have no tech talent on hand. They acquire tech talent but that talent leaves shortly after acquisition after realizing they are not a technology company. IT's quite clear according to the cooperfield research and streetsweeper reports that they are cooking their books. Tangoe is not profitable, never was profitable (except for a short stint after acquiring billingIT) and never will be profitable. You can acquire 100% of the market share but unless your model is profitable you will not be profitable even if you own 100% of the market. These guys belong in a prison cell right next to Madoff.

November 07 2012 at 10:08 PM Report abuse rate up rate down Reply