For a rising portfolio

Learn everything you need to know in 'How to Find the Best Growth Stocks' for FREE from The Successful Investor.

Canadian Growth Stocks: CGI Group, CAE Inc., Fortis Inc. Stock and more.

 I consent to receiving information from The Successful Investor via email. I understand I can unsubscribe from these updates at any time.

Topic: Growth Stocks

Growth Stocks: Earnings fall for Evertz Technologies

Pat McKeough recently replied to a member of his Inner Circle looking for his take on this provider of video and audio systems. The company’s niche market and leading position enhance its appeal, but that could also challenge its future growth, says Pat.

Q: Hi Pat: May I have your opinion on Evertz Technologies (ET)? Thanks.

A: EVERTZ TECHNOLOGIES LTD. (symbol ET on Toronto; www.evertz.com) makes video and audio systems for telecommunications and other media industries.

The company sells its hardware and software to content creators, broadcasters, specialty channels and TV service providers. Customers use them to support complex digital and high definition television (HDTV) networks as well as high-bandwidth Internet services.

Customers have used Evertz’s hardware at events such as the Sochi Olympics in Russia, the FIFA World Cup, the Commonwealth Games and the U.S. midterm elections.

The company’s products aim to improve the efficiency of its clients signal routing, distribution, monitoring and content management. They also help businesses automate manual processes, which reduces their costs.

Evertz’s revenue rose 30.0%, from $293.4 million in 2012 to $381.6 million in 2016 (fiscal years end April 30). The company’s earnings rose from $0.81 a share (or a total of $60.0 million) in 2012 to $0.88 (or $65.2 million) in 2013. Earnings fell to $0.85 a share (or $63.5 million) in 2014, partly due to higher research costs. Earnings then recovered to $0.87 a share (or $66.4 million) in 2015, and reached $0.94 a share (or $70.9 million) in 2016.


Would You Recommend Your Advisor to Your Best Friend?

Many of our wealth management clients are referred to us by clients who have been with us for years. In 2016 alone, 45% of our new clients were recommended by someone who already has their investments with us. And many of those clients started by subscribing to our advice.

To find out more about Successful Investor Wealth Management, click here >>


Growth Stocks: Revenue falls 8.7%

In the three months ended January 31, 2017, Evertz’s overall revenue declined 8.7%, to $91.1 million from $99.8 million a year earlier. Its revenue from Canada and the U.S. increased 6.0% during the quarter to $56.8 million (62% of total revenue). The company’s revenue from other countries (38%) declined 25.7% to $34.3 million.

In the quarter, earnings per share fell sharply, to $0.13 from $0.33, on higher research spending as well as foreign-exchange losses due to the sharp rise in the U.S. dollar.

On January 31, 2017, the company held cash of $64.1 million, or $0.85 a share. It had almost no debt. Evertz also spends a high 19% of its sales on research.

The stock trades at 15.8 times the $1.06 a share the company is likely to earn for all of fiscal 2017. The shares yield 4.3%. In December 2016, Evertz paid a special dividend of $1.10 per share.

The company’s leading position in its niche market and its high research spending add to its appeal. However, its success could prompt much larger makers of electronic equipment to enter the market.

Inner Circle recommendation: Okay to hold, but only for aggressive investors.

For our recent report on a growth stock that’s ready for robots, read Domino’s Pizza automates delivery.

For our views on how to discover the best growth stocks, read Stocks on the rise: Smart growth stocks to invest in or stocks to avoid.

Comments

Tell Us What YOU Think

You must be logged in to post a comment.

Please be respectful with your comments and help us keep this an area that everyone can enjoy. If you believe a comment is abusive or otherwise violates our Terms of Use, please click here to report it to the administrator.