Helios and Matheson

I bought Helios and Matheson way back in 2005 at around Rs. 180 per share. This transaction was done on the basis of some encouraging research reports
(a) Kotak PCG gave a buy call with a target of Rs. 400 (July 2005; CMP Rs. 157)
(b) ICICI DIrect Pick of the Week with a target of Rs. 454 (here)

Rs. 400 or 454 remained a distant dream for the scrip. In fact, the highest price the stock scaled was about 270 rupees. Over the last 2 years (Apr 06 to Apr 08), the stock has lost 60% in value ... and 46% in the last 1 year.

In the meantime, the EPS has increased from Rs. 13.40 in Mar-2006 to Rs. 22.29 in Mar-2007. The company is expected to deliver an EPS of 29.66 on the basis of the last 4 trailing quarters. This makes things interesting as Helios & Matheson's price-earning comes down drastically from 13.4 (Apr '06; 180/13.4), 6.3 (Apr '07; 142/22.3) to a current PE of 2.4 (72/29.7).

Over the last 3 years, the EV/EBIT ratio has only gone better in time (9.4, 5.2, est 3.4). (It's true that the enterprise value has decreased, but 'value' is quite a misnomer here .. as EV is a representation of mcap + debt - cash). The dividend payout of the firm is 35%, which gives it a useful dividend yield of 4.9%. The company has been on quite an acquisition spree having 5 M&A activities this year.

The OPM and NPM of the company has gone down. I think it's because of the acquisitions done by the company which have added to the revenue but not given an equal rise in profits. (I might be wrong, there is no data to prove/disprove this).

At a price-earning of 2.4, is Helios & Matheson worth a dip into? I'm still not sure why the stock has not been keeping track with other tier-3 IT stocks which are atleast at an 8-9 price earning.