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Editors Note: This column is a monthly addition to GIS WORLD that will focus on stocks involved in GIS products and services. However you use GIS, you’re probably involved somehow with the companies that will be covered in this column. Your involvement may be as a client, customer, employee or even as a current or future investor. The information presented in this column, written by L. Ried Schott, president, Schott Consulting Services, will help keep you informed about various GIS companies and the industry in general as measured by the GIS WORLD Stock Index. If you have any suggestions regarding stocks to add or delete, or topics to cover, please forward them to Schott at P.O. Box 5987, Playa Del Rey, CA 90296; E-mail: scs@schott.com.
GIS companies typically fall into four basic categories: software, services, hardware, and data. Some companies are hybrids of these categories, but usually they’re stronger in one area. This column will cover the first three categories. A slightly different focus is provided in Business Geographics, one of GIS WORLD’s related publications, which includes all categories except services. The topics in the two magazines also vary.
The GIS WORLD Stock Index
One way to keep track of an industry or group of stocks is through an index. A specialized GIS WORLD Stock Index has been created, representing a total of eight stocks. These stocks, and their corresponding symbols, are shown on the accompanying chart.
To be included in the index, a company needs to be publicly traded on one of the major U.S. exchanges. A second requirement is that the company have a certain minimum percentage of its total revenues from GIS services or products. (This initial threshold is 8 %). These requirements exclude a few foreign-based firms and large companies.
To identify the firms that comprise the index, the public status of dozens of companies were investigated. In determining the threshold, GIS revenues were obtained from Dataquest Inc., San Jose, Calif., and total revenues were reported by the companies.
Daily closing stock prices for all index stocks since the beginning of 1994 were obtained and an equal price weighted model was developed. Therefore, the index assumes that the same dollar amount was invested for each company at the beginning of 1994.
When a company becomes public after the starting date of the index, it’s added at an equal price weighting based on a new issue’s opening price. Dividends also are included.
As shown, the index begins at a base of 100. Therefore, if $100 was invested in equal amounts in all index stocks in the beginning of January 1994, and an equal pro-rata amount invested in the new issues, it would be worth $182.73 as of June 30, 1995--a total increase of 82.73 percent during 1.5 years.
Comparative Index Performance
The index has outperformed the Standard and Poors 500 index (S&P 500), as shown by the chart. Since the beginning of 1995, the mid-year return of the index is 39 percent, compared to 19 percent for the S & P 500. Returns of two other major indexes, the Dow Jones Industrial Averages (DJIA) and the National Association of Security Dealers (NASDAQ) composite index, are 19 percent and 25 percent, respectively, during the same time period.
For all of 1994, the index’s first full calendar year, its total return was 31.9 percent compared to -1.3 percent for S&P 500, -2.4% for NASDAQ and 2.1 percent for DJIA.
Company News at Press Time
The closing prices of MapInfo stock (MAPS), an index component, fell 12.25 points from July 13-14, finishing at 22.38. The trading high and low for MapInfo, since going public in February 1994, has been 40 and 14.75, respectively. The reason for the drop is a result of disappointing earnings and the lowering of a brokerage firm’s recommendation (Alex, Brown & Sons) from “buy” to “neutral” Analysts expected third quarter share earnings (ending June 30) of 22 cents, but they came in at 13 cents(diluted) vs. 15 cents for the same quarter a year ago.
GIS WORLD, October, 1995; pp 62.
(This article was reproduced with permission from GIS WORLD Inc.)