January continues to be a success for app developer G5 Entertainment, looking at this week’s app ranking check. Not the least on Google Play, which was the trouble child in October – November for G5, G5 games are climbing the top grossing charts.
CEO Vlad Suglobov indicated in several interviews recently that January is on track to become a new record month for G5 and our ranking check certainly adds credibility to his statement.
Number of G5 Entertainment games among the top grossing charts for iOS:
(We are screening the app markets of Australia, Brazil, Canada, China, France, Germany, Italy, Japan, Netherlands, Russia, South Korea, Spain, Sweden, UK and USA)
Number of G5 Entertainment games among the top grossing charts for Google Play:
(For Google Play, we are screening the app markets of Germany, Netherlands, Sweden, and USA)
In the meantime, the G5 Entertainment share continues to appear significantly undervalued.
As you can see in the graph below, the G5 share is trading at roughly the same levels as one year ago. That is despite the fact that the company has grown revenues by more than 70% and EPS by around 55% (according to preliminary FY 2012 figures). This means that the implied valuation has come down significantly compared to one year ago. The G5 share is currently trading at around 17x 12m trailing earnings and at around 10x 12m forward-looking earnings, if we assume revenue growth in-line with management goals. One year ago, the figures were 26x and 14x respectively. Applying the same multiples from one year ago to today, a reasonable share price would be SEK 63 – 70.
We expect this gap to be closed, sooner rather than later as a first move in what will likely be a significant revaluation during 2013. We see the recently announced relisting to Nasdaq OMX as a major share price driver if the company continues to deliver on its goals.