GTSI Profit Jump Boosts Stock

GTSI Profit Jump Boosts Stock

GTSI Corp.'s stock has been soaring since the government reseller reported a nearly 300 percent increase in profits for 2000. The company also announced a stock buyback program.

GTSI (formerly known as Government Technology Services Inc.) of Chantilly, Va., announced Feb. 5 its net income reached $10.6 million in 2000, or $1.18 per share, up 296 percent over the $2.7 million reported as net income in 1999.

GTSI is a value-added reseller specializing in information technology sales to the federal government.

"I will give the management team at GTSI credit," said Tom Meagher, vice president of equity research at BB&T Capital Markets, Richmond, Va. "They have moved much more into services and gotten away from just shipping boxes ... A lot of the smaller VARs have been driven out of this marketplace. There's only a few companies who can do it [well]. It's an incredibly tough market."

With its stock trading at around $4.09 Feb. 2, the company's board of directors announced a common stock repurchase program, with GTSI pledging to spend up to $4.7 million on stock buybacks.

GTSI Chairman and Chief Executive Dendy Young said the company's stock is undervalued, and that its book value is more than $7 a share.

A company's book value is an accounting value of a firm's stock, representing the value of the company's assets a shareholder would theoretically receive if a company were liquidated.

The company's stock responded Feb. 5, jumping to $5.75, and at the closing bell Feb. 6, it was trading at $6.22 ? more than 50 percent above its Feb. 2 close.

BB&T's Meagher spoke cautiously about GTSI's prospects. "They got a nice move on their stock yesterday, but it is thinly traded," he said.

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