ENOC and CRM -- Two Birds of a Feather
By: Van Morris posted Feb 28, 2008, 8:09am
Enernoc stock finished off its recent slide with a thump, driven by a conviction to invest for the opportunity.
The sound byte was an earnings miss, which eclipsed a deeper story of fantastic growth and a ballooning backlog. Lag times from sales expenses to revenue recognition are greatest in the congested PJM Region which currently has some of the juciest prices for capacity and energy.
What do ENOC and CRM have in common? From an inside view, they can calculate the Net Present Value of a newly acquired customer, and they can track renewal rates.
I’m reminded of the multiple “you’re spending too much for growth” pullbacks that have occurred in Salesforce.com’s stock history – including the one that came within the first public year.
The risks are different, but the calculus is quite similar, and guide rational internal investment decisions.
The company was on sale at a discount to their IPO price today.
Disclosure: I am now long the stock. Readers should know that our position could change without disclosure or updating this blog.
3 comments:
Maybe. Still to be proven. What length are the contracts? What is the renewal history?
Are they vulnerable to the Utilities changing their deal?
Contracts used to be 1 year, now they are pushing 3 year contracts.
I don't know what the split is, but i think the majority are multi year contracts.
The renewal history to date has been very high (98+%) according to what i remember being mentioned on the conference call.
Hang in there folks, fundamentals will return to be in vogue. At times like these, stocks are returned to their rightful owners.
As ENOC continues to grow and moves to profitability the market will recognize the value creation
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