CIBER, Inc. (CBR)

According to Morningstar:

CIBER (CBR) is a system integration and information technology (IT) services consulting firm. CIBER provides IT system integration consulting and other IT services primarily to governmental agencies, and Fortune 1000 and middle market companies across industries.

The Company provides its clients with a range of IT services, including custom and package software development, maintenance, implementation and integration. To a lesser extent, the Company also resells certain IT hardware and software products. CIBER operates in five business segments: Commercial Division, European Division, State & Local Government Division, Federal Government Division and Enterprise Solutions Division.

Ciber finished 2008 with record sales and earnings yet the share price retreated by 71% from a September 3rd yearly high of $8.97 to Monday’s $2.60. Most of the drop came simply due to putrid market conditions but CBR shares had hit $2.95 in the November sell-off before rallying back to $5.66 as recently as this January.

The credit market freeze caused CBR to issue over 7 million new shares to refund a debt issue that was coming due. The arbitrage selling pushed the shares to a new all-time low of $2.03 a few weeks ago and the shares have been recovering since then.

Fundamentals look excellent.

Consensus estimates for 2009 and 2010 are now centered on about $0.41 and $0.47 respectively taking into account the extra shares that were recently issued and the weak economy.

That means that CBR shares are now offered at < 6.4x forward earnings and less than half of book value. Both of those metrics are the best valuations ever for buyers of Ciber shares.

A return to even 12 times this year’s estimate would brings these shares back to $4.92 or plus 89% from their present quote. At that price CBR shares would still be lower than the annual lows in each year 2004 through 2007.

This is a nice company with revenues over $1 billion in each of the past two years and solid profitability. There have been 10 insider buys (of 318,600 total shares) versus just 1 insider sale (of 16,161 shares) over the past 6 months. Five of the buys came this month as CBR shares were being pummeled after their secondary offering.
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Personal Note: Like the author of this article, I would set a year-end target near $5, but would set a higher price of $8 for next year.