Dykstra says the consulting firm’s stock is at 17 times trailing earnings. He believes Watson’s rival Hewitt Associates could be a potential buyer, he said on TheStreet.com.
IPE.com points out that Hewitt has made more than $1 billion in acquisitions in the past few years. It bought UK company Bacon & Woodrow for $259 million in 2002 (See Hewitt Bacon and Woodrow Join Forces ), and last year it bought Exult, a human resources firm (See Hewitt, Exult Shareholders Make it Official ), for $776 million.
Hewitt has not made mention of any acquisitions. IPE.com points out that last month the company said human resources business process outsourcing would be the “major driver in the growth of our revenue and profits over the next several years”.
IPE.com said Dykstra cited the consistency of Watson’s numbers, its zero debt, forward price/earnings ratio of 14.36, and return on equity of 21.44%, making the company attractive for purchase.