Stock Watch
Intrado: Sitting in a Sweet Spot
This provider of emergency 911 data-management services has a massive stronghold on a developing market with little competition.
September 22, 2003
Emergency calls are routine at Intrado (TRDO). This provider of 911 data management services for landline and wireless telecom carriers maintains customer data and system activations, and can pinpoint the location of 911 callers.
Congress is expected to soon authorize $500 million per year in grants to enhance emergency communications services -- no doubt Intrado will benefit. The company has a massive stronghold on the market. Its landline customers include the four Baby Bells (BellSouth, Qwest, SBC and Verizon) as well as Cox Communications and MCI. On the wireless front, the company is assisting six of the seven largest U.S. wireless carriers with a new federal mandate to identify the location of wireless 911 callers.
Standard & Poor's recently highlighted Intrado as its Focus Stock of the Week. It says that although telecom emergency notification services is still a developing market, Intrado should have no problem maintaining its leading position. "Competition isn't likely to emerge for at least three years until demand reaches a critical mass to warrant the attention of larger outsourcers." And, S&P points out, it is currently too expensive for the Bells to move their 911 service in-house any time soon.
Intrado trades at 24 times 2004 consensus earnings estimates of $0.98 per share, while the S&P 500 holds a P/E ratio of 18. However, considering the company's vast market share in a rapidly-growing industry, it may be worth the premium. According to Thomson/First Call, analysts foresee profits growing 30% annually for the next three to five years versus just 7% for the overall stock market.
--Erin Burt