I am back after a hiatus from trading..
I return here with a potential superstock to write.
SuperCom Ltd. provides identity, machine-to-machine, cyber security device, payment, and connectivity products and solutions to governments, and private and public organizations worldwide.
Earnings Winner
our net profit improved to $1.6 million or an earnings per share of $0.11, an improvement from non-GAAP net loss of $2.5 million, our earnings per share of negative $0.17 per – in Q3 of 2016.And net profit of $0.2 million or $0.02 per share in the prior quarter.
Stock is having a breakout quarter, year over year, and q/q sequentially.
Strong Guidance For Q4
For the third quarter of 2017, our revenue grew organically by 89% from Q3 of last year to a record $9.6 million and 28% from the prior quarter.
“For the first nine months of 2017, our revenue increased 69% to $25.5 million compared with the same period last year”
Guidance for the year is above 35M. Management tends to give guidance only if they are confident of hitting it. That means Q4 will probably hit over 10 M.
Given the margins expansion and cost reduction initiatives -> “We are continuing to see significant operational efficiencies gain traction as to continue integrating realizing synergies from our acquisitions. “, we are likely to see sequentially higher Q4.
” think that what we saw in the third level is going to be almost a final G&A level we believe and also sales and marketing we have done in the efficient process optimization of all the – we acquired and I think that going forward we’re going to see similar level for SG&A going forward”
With that, much of the new revenue, will very much fall to the bottom line and we will see a explosion in EPS growth if revenue can follow through.
Technicals
moving on to the technicals, Breakout on earnings was a whooping 12 Million. The float of the stock is only around 10 millions. There is significant interest in the stock.
Stock was also in a nice low volume base, which sets the foundation for the current advance.
SPCB has been abit choppy since the gap up, but ultimately still showing signs of demand. I bought on the day of gap up at the open. And added my position today as volume dried down to 40k in the recent two days.
Other things i like include
Insider ownership of 22%
Undervalued
Relatively low float
Assuming SPCB earns 0.11EPS (low estimate) for the next 3 quarters, that would gives us 0.44 EPS for the the year.
If it can hit PE of around 20, that would be a $8.8 price target for this stock. Almost double from the current price.
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