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"We rate RADCOM (RDCM) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, compelling growth in net income and expanding profit margins. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth greatly exceeded the industry average of 4.3%. Since the same quarter one year prior, revenues rose by 26.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
- RDCM has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. To add to this, RDCM has a quick ratio of 1.67, which demonstrates the ability of the company to cover short-term liquidity needs.
- RADCOM reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, RADCOM continued to lose money by earning -$0.20 versus -$0.93 in the prior year. This year, the market expects an improvement in earnings ($0.19 versus -$0.20).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Communications Equipment industry. The net income increased by 167.7% when compared to the same quarter one year prior, rising from -$1.15 million to $0.78 million.
- The gross profit margin for RADCOM is rather high; currently it is at 65.97%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of 12.91% trails the industry average.
- You can view the full analysis from the report here: RDCM Ratings Report