October 29, 2008 - Price:$4.80;P/E:19;Yield:0;PSR:.9;ROE:12.8;D/E.

Sapient Corp. (SAPE-NASDAQ) provides business, marketing, and technology consulting services worldwide. The company offers its services in the areas of business and information technology (IT) strategy, business applications, business intelligence, and outsourcing. Its business and IT strategy services include business-process consulting, e-business and Web strategy, IT governance and advisory services, IT strategy for SAP, and program management office.

Its business intelligence service offerings include SAP business intelligence solutions, such as strategic assessments and business case development, business intelligence pilots, business intelligence implementation and enhancement, SAP business intelligence training, and business intelligence application outsourcing.

The company's outsourcing services comprise application maintenance, application testing, capacity partnerships, and offshore development center setup.

Sapient offers its services to technology, communications, energy and utilities, financial services, media and entertainment, automotive, transportation, health care and life sciences, education, consumer/retail products, and travel and hospitality markets, as well as to federal, state, and local government clients in the U.S. and to provincial and other governmental entities in Canada and Europe. Sapient Corporation was founded in 1990 and is headquartered in Cambridge, Massachusetts.

This stock hit an all-time high of $74.50 in 2000, just before the dot com crash (stock prices reflect 2 for 1 split in 2000). In 2002, you could have picked up as much stock as you wanted at 70 cents a share. Since that low point, the stock rebounded to $9.40 in 2004 and traded between $4.40 and $10. With the current price of $4.80, it's much closer to the low end of that range and may be of interest to some investors.

Earnings have been erratic for Sapient. In 2003, they were negative at 4 cents a share (but better than the minus 57 cents of 2002). Then they went to positive 18 cents in 2004, followed by another black ink year in 2005 with 20 cents a share. But then they slipped to 3 cents in 2006. Last year they went to 12 cents. This year, analysts see 37 cents (there are 6 covering the stock). Next year, they forecast 45 cents (the range is between 39 cents and 51 cents). With the stock at $4.80, that puts the forward p/e a little over 10. Not too rich for a stock that analysts expect to grow earnings at an average of 20% a year over the next 5 years. Over the last 5 years, the average annual growth was 14.4%. The quarterly earnings call will be on November 6th, available at www.sapient.com.

In the last company conference call, management raised its profit guidance for 2008, thanks to strong service revenues. Even with a weak U.S. economy, 2009 should also be a good one for Sapient. Companies are determined to be more efficient and increase their market share through IT, the sweet spot for SAPE . Recent contracts with media and newspaper companies that want to expand their Internet presence are good examples. And Sapient isn't reliant on the U.S. for business. 30% of sales come from international clients.

Some numbers: Market Cap is $605 million. There's $145 million in cash or $1.16 of cash per share. Current ratio is 2.47. Book value is $2.18, putting the price to book at 2.1. There is no debt on the books. Operating margin was 5.51% with Profit margin at 5.06% in the last 12 months. Beta is 1.87. There are 125.7 million shares outstanding with a float of 77.41 million. Insiders own 36.39% of the stock.

This is not a big company, but it survived the dot com crush. With a solid balance sheet, plenty of cash, and strong service contracts, it should see better earnings next year. If it delivers on the consensus of 45 cents, then this stock may be one of the bargains in the market. But remember: earnings have been volatile in the past. There will be more data for analysis on November 6 when the company has its earnings conference call.

- Company Web site: www.sapient.com

- Ted Allrich