`American Is A Bargain'

When technology analyst Vivek Rao of Hampshire Securities discovered American Software (AMSWA) in July, he was attracted by its turnaround--after it had lost money for three consecutive years. It was back in the black in the year ended Apr. 30, 1997, posting earnings of $2.3 million, or 10 cents a share, on revenues of $84 million. Rao is even more bullish now: He thinks American has become way undervalued after it took public one of its units--Logility, on Oct. 7. American Software sold the public 2.2 million shares, or 19%, of Logility, a provider of software that optimizes efficiency of manufacturers and retailers,


Vivek notes that Logility has a market value of $167 million at its current price of 9 a share. That means American Software's 81% stake in Logility is worth 5 3/4 a share in American's stock. So at its current price of 9 3/8, American is selling at around 3 a share.

"At that price, American is a bargain, no matter how you slice it," says Rao. He figures the stock is worth 18 to 19. Rao expects American will earn 39 cents a share in the year ended Apr. 31, 1998, and 64 cents in fiscal 1999. The company provides 1,200 customers with multi-platform software solutions for such uses as demand forecasting, logistics planning, and warehouse management. Among its customers: Coca-Cola, Ford, and DuPont.

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