InnerWorkings

Company Description

InnerWorkings, Inc. (InnerWorkings) is a provider of managed print and promotional procurement solutions to clients. The Company’s software applications and database, PPM4, creates a solution that stores, analyzes and tracks the production capabilities of its supplier network, as well as quote and price data for print jobs.

Earnings Surprises Percentages Are Big

A penny or two of a beat may not seem like a lot, but when the Zacks Consensus Estimate is only $0.05 or $0.06, the percentage above expectations translates into 20% and 16% respectively. Add in a $0.02 beat on a $0.07 estimate for a 28% outperformance and attention is piqued. The most recent quarter, however, was just an earnings meet, so hopefully the outperformance will soon continue.

The company recently noted that it will announce its fourth quarter and full year 2011 results after financial markets close on Tuesday, February 14, 2012. The Zacks Consensus Estimate is calling for $0.10 this quarter and $0.11 next quarter.

Low Volume

Trading volumes are thin for INWK, a red flag for some. The stock average volume of 157K shares is misleading in that recent volumes have been much lower and just as an average would suggest, there have been 200-400K days as well. Getting in and out of a position in a stock with low volume is a little harder for larger investors that can materially move the market with a large position. In an effort to alleviate that, the company plans to host a meeting for institutional investors and research analysts on Friday, February 24th. The analyst day will likely provide a roadmap for the future and should increase exposure which could lead to more volume.

Valuations

The top line continues to grow, and has often been just out of reach of the Zacks Consensus Estimate. I point this out because the price to sales metric has INWK trading at .7X. This is a significant discount to the industry rate of nearly 2x. PE is a different story, with INWK trading at healthy premiums to the industry on both trailing and forward measures.

The Chart

A smooth chart for INWK gives us even more faith in this Zacks #1 Rank (Strong Buy). Should the company provide a few more earnings surprises, we would expect a stock in the mid teens.

Brian Bolan is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Home Run Investor service

Read the full analyst report on INWK