Dow Jones 9371.61 -2.60 9:06 am PST, August 29, 2003  NASDAQ 1801.51 +1.33 For info, visit access.smallcapnetwork.com S & P 500 1001.89 -0.95 To be removed, please click here Russell 2000 496.96 +1.15 VOLUME 03: ISSUE 49  Hovering Hummingbird? In March, we profiled Hummingbird Ltd. (NASDAQ: HUMC) as the company's shares traded at $16.25. Since then, the shares rose 32 percent to $21 and change and have subsequently settled down to $19.85. Although presently range bound between $18 and $20, the prospects continue to look intriguing.  Simply put, Hummingbird, through its powerful suite of enterprise software, manages a company's data and information and turns them into knowledge assets. Sound boring? Hardly. For businesses that depend on the integration of documents, information and data, the result for customers is a robust and scalable system that ultimately makes all these disparate, cross-platform data constituents hum like a well-oiled machine. Over 5 million users now depend on Hummingbird's Enterprise products to enhance efficiency, cut costs and, of course, increase profits. Quality will likely out Technically, the shares seem to be forming an uptrend and should they break out of this range the next resistance is $22. Conversely, a break below $16 would not be good. Actual and projected numbers seem to favor the former scenario. Projected earnings for fiscal 2003 and 2004 (as at September) come in at $1.35 and $1.51 a share respectively. Future price/earnings ratios with the shares at $19.50 look like 14 times for fiscal 2003 and 13 times for 2004. Even if those numbers decline slightly, the ratios remain compelling. Sales for the 9 months as at June 2003 were better by 4 percent, at $139 million, over the same period 2002. In March, we saw the per share projections for fiscal 2003 and 2004 at $1.27 and $1.41. Nice to see the projected improvement in what is still a challenging environment for both hardware and software companies. The reason the shares' climb was halted at $21 and change was due to the announcement in early July that acquisition costs and postponement of some pending business lowered guidance for third quarter earnings by about 10 cents to 25 cents a share. The actual earnings number came in at 26 cents a share.  Also announced in the third quarter report was the company's cash position of $111 million dollars, which, given the company's float of 18 million shares, translates into a nice downside buffer of approximately $6 a share. Low PEG in a round hole Even the PEG ratio (price/earnings to growth), at a level of 1.1, should also entice investors. To quote myself from a previous issue: "The PEG ratio is calculated by dividing the price/earnings  (P/E) ratio by the earnings per share (EPS) growth. The PEG ratio gives investors more information than the p/e ratio, as there are more constituent numbers. While the p/e tells the story of how a stock fares in the current environment against its own historical p/e, those of its peers and against the market overall, the PEG takes the process one step further and relates a company's growth to share price. In this way, investors can see whether the share price is overvalued or undervalued based on historical or projected growth figures." The PEG median is 1.0, which represents fair value for a share price. Below 1.0 is undervalued, while a ratio above 1, say 2.0 or 3.0 denotes an overvalued situation. However, the ratio has to be viewed within the context of a sector's volatility, but the standard holds in most arenas. PSR: A financial health test Another caveat, albeit minor, is that HUMC's price to sales ratio (PSR), at 1.6 times, is a bit high: But given that sales appear to be on a decent uptrend, that shouldn't deter investors. Again, the ratio is dependent on the industry in question. The PSR is calculated by dividing a stock's current price (or total market cap) by its sales per share (or total annual sales). Intel's PSR is 6.2. Cisco's is 6.3. White Electronics' is 2.3. You get the point. The ratio evidences how much you're paying (through the share price) for each $1 of sales. We'll do a piece on PSR in the not-too-distant future. Promise. In the meantime, have a look a Hummingbird. It's a strong contender in the burgeoning sector of data management. I'm sure you'll have comments. Send them in here: Editor@smallcapnetwork.com Unsubscribe Here D I S C L A I M E R : The SmallCap Digest is an independent electronic publication committed to providing our readers with factual information on selected  publicly traded companies. SmallCap Digest is not a registered investment advisor or broker-dealer. 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