Sierra Wireless Inc.
) reported double-digit growth in both the top and bottom lines
during its third quarter, leading to strong earnings estimate
revisions. This provider of wireless solutions became a Zacks #1
Rank (Strong Buy) on November 7. With solid demand for OEM-related
products and a P/B multiple of just 0.83, this Zacks #1 Rank
(Strong Buy) stock offers a value proposition.
Strong Q3 Earnings
On November 1, Sierra Wireless reported third-quarter earnings of
23 cents per share, surpassing the Zacks Consensus Estimate by a
whopping 155.6% and the year-ago earnings by 130.0%. Total revenue
of $162.6 million barely missed the Zacks Consensus Estimate by
1.2%, but increased 10.8% year over year. Both the M2M and mobile
computing segments of the company generated significant
year-over-year revenue growth.
Strong Earnings Estimate Revisions
Earnings estimates for Sierra Wireless have been rising over the
last 30 days. The Zacks Consensus Estimate for 2012 moved up 17.2%
to $0.68. For fiscal 2013, the Zacks Consensus Estimate increased
12.5% to $0.72. The current estimates indicate year-over-year gains
of 775% for fiscal 2012 and 5.93% for fiscal 2013.
In addition to a low P/B multiple, the stock trades at a P/S
multiple of only 0.37 and a forward P/E multiple of just 11.45 (a
P/E ratio below 15.0, a P/S ratio below 1.0 and a P/B ratio under
3.0 generally indicate value). The P/E, P/S and P/B multiples for
the company are in contrast to the peer group averages of 17.75,
0.85 and 1.59, respectively.
Chart Shows Potential
Over the last year, the stock has returned 10.3%, significantly
outpacing the S&P 500's return of only 8.1%. The widening gap
between the stock price and the earnings estimates for 2012 and
2013 indicate that SWIR is currently undervalued.
Based in Richmond, Canada, Sierra Wireless Inc. was founded in
1993. The company develops USB modems, data cards and routers.
These products are mainly used by wireless service providers,
infrastructure solution providers, original equipment manufacturers
and distributors. It also offers software engineering, integration
and design services to customers to facilitate the use of its
products. Currently, the company is having a market capitalization
of $230 million.
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