Starcom (STAR:AIM) 19.6p Gain to date: 4.6%

It is a big deal for a microcap to go through the flotation process but it is still a touch disappointing to see Starcom (STAR:AIM) stumble on its sales execution. Valuable deals for its Helios vehicle tracking kit are behind schedule and the firm’s WatchLock and Triton products are feeling the effects of a lack of focus. Fortunately, these problems are easily fixed and Starcom is predicting a big second half, with a ‘significant increase in sales’ at WatchLock particularly.

This might suggest Northland overdid it when the house broker slashed its estimates for earnings before interest, tax, depreciation and amortisation (EBITDA) for this year by a third and next year by half to $2.4 million and $3.5 million respectively. Those figures produce earnings per share (EPS) forecasts of 1.6p and 2.2p and at 20.5p the stock trades on forward price/earnings (PE) multiples of 12.8 and 9.3 respectively.

Those ratios look decent value for a business with exposure to several fast-growth ‘connected’ product lines that are barely beyond their trials and have huge potential.

The house broker is still enthused despite this sticky patch and we are inclined to agree with Northland.