bstocksdev

Double-Take Software (NASDAQ: DBTK) products and services enable customers to protect and recover computer files. Its software helps users to reduce or eliminate data loss and recover applications, through automatic or manual means. Customers include law firms, financial institutions, hospitals, school districts and government entities. Hewlett-Packard (NYSE: HPQ) and Microsoft (NASDAQ: MSFT) are among the firm's strategic partners. EMC Corporation (NYSE: EMC) and Symantec (NASDAQ: SYMC) are major competitors.

The company surprised the Street last week, when it reported Q1 EPS of 13 cents and revenues of $23 million. Analysts had been looking for 11 cents and $22.2 million. Management also guided Q2 EPS to 15-16 cents (14 cent consensus), Q2 revenues to $24.4-$25 million ($24.44M consensus), FY08 EPS to 65-67 cents (65 cent consensus) and FY08 revenues to $101.7-$103.5 million ($102.29M consensus).

DBTK shares popped into a bullish "flag" consolidation pattern on the news. Prices frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.

Brokers recommend the issue with four "strong buys" and five "buys". Analysts see a 33% growth rate, through the next year. The DBTK P/E ratio (17.52), Price to Book ratio (4.09), Price to Cash Flow ratio (14.69), Price to Free Cash Flow ratio (15.42), Sales Growth rate (28.49%), Operating Margin (20.01%), Net Profit Margin (21.97%), Return on Assets (19.90%), Return on Investment (28.24%) and Return on Equity (30.30%) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 65% of the outstanding shares. Over the past 52 weeks, the stock has traded between $9.90 and $26.54. A stop-loss of $12.60 looks good here.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in any of the stocks mentioned above.