TransAct Technologies TACT shares have plunged 37.6% year to date (YTD) against the Zacks Computer and Technology Sector and S&P 500 index’s growth of 18.9% and 17.1%, respectively, YTD.
TACT stock has also underperformed the Zacks Computer-Peripheral Equipment industry’s decline of 28.4% in the same time frame.
Reason Behind TACT Stock’s Underperformance
TransAct Technologies is grappling with multiple challenges in its Casino and Gaming business. TACT’s OEM customers have slowed their order rates as most of them are facing over-supply positions and inventory accumulation.
TransAct Technologies’ Casino and Gaming business has also been affected by the re-entry of its major competitor, which is trying to reclaim its market share through price competition. TACT also faces competition in the Food Service Technology segment from players, including Digi International Inc. DGII, Avery Dennison Corporation AVY and Ecolab Inc. ECL.
Digi International provides a range of IoT products ranging from Packaging and sorting equipment, food safety equipment like DigiSense, weigh-wrap labelers and many more. On the other hand, Avery Dennison and Ecolab provide solutions, including labeling solutions and food safety solutions. Most of these competitors have greater resources than TACT.
These factors have significantly impacted TACT’s top line, which has been on a declining trend through the past two quarters, but showed signs of recovery in the second quarter of 2024.
TransAct Technologies YTD Performance
Image Source: Zacks Investment Research
TACT Recovers on the Back of BOHA
While TransAct Technologies is suffering in its Gaming and Casino business, its food service technology business is making strides with BOHA Terminal 2. The device is an international success with TACT, adding 13 new customers with the BOHA Terminal 2 in the second quarter of 2024. TransAct Technologies is expecting 3,500 units of BOHA Terminal 2 to be sold in the remaining part of 2024.
BOHA Terminal 2 offers customers compliance with the Food and Drug Administration, making this a unique selling point of the device. TACT is receiving positive feedback from both existing and prospective customers, with many existing customers upgrading to BOHA Terminal 2 from the older AccuDate and original BOHA terminals.
The BOHA platform is entering new markets where customers are appreciating its unique offerings and cost savings. This is also reflected in TACT’s revenues, which are recovering from the temporary slump. In the second quarter of 2024, TransAct Technologies reported revenues of $11.6 million, which increased 9% sequentially, but was down 42% on a year-over-year basis.
The company expects its 2024 revenues in the range of $45-$50 million. The Zacks Consensus Estimate for the same has been pegged at $46.94 million, reflecting a year-over-year decline of 35.4%.
Here's What Should Investors Do
Given the bright prospects of its Food Service Technology business, TACT is in a position to take off from its temporary slump. TransAct Technologies has a Value Style score of B, reflecting that the stock is fairly valued. We recommend investors to buy this Zacks Rank #1 (Strong Buy) Stock at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
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TransAct Technologies Incorporated (TACT) : Free Stock Analysis Report
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