Numerex Corp (NMRX) have been volatile, but given the long-term outlook, the risk could pay off.
Estimates are moving higher, pushing shares to a Zacks #1 Rank (Strong Buy) and cash flows are really turning around.
Company Description
Numerex offers business services, technology and products for machine-to-machine uses. The company serves a variety of industries, from utilities to healthcare, and allows customers to monitor and manage assets remotely.
Topped Forecasts
On Feb 22 the company reported full-year and fourth-quarter results. Digital subscribers rose 25% on the year, leading to a 15% increase in revenues. The top-line came in at $58.2.
Earnings per share for the quarter worked out to $0.07, which was 3 cents higher than the Zacks Consensus Estimate. Additionally, Numerex offered some optimistic projections. The company expects to grow its subscriber base by 25-30% and its annual service revenue by 18-23%.
Estimates Jump
Full-year estimates rose 6 cents for this year and are now averaging $0.31. That mark represents a 79% growth rate. Analysts polled by Zacks are expecting $0.41 per share next year, up 2 cents and showing a 34% expected growth rate.
Cash is Back
Numerex’s operating cash flow shows a perfect picture of a rebounding stock. In 2008 the company showed OCF of $8.4 million, which then dwindled to just $5.1 in 2009. However, the 2010 level jumped back to $8.6 million and given the outlook for 2011 it should move much higher this year.
The Chart
Shares of NMRX were extremely volatile on the earnings release, but have stabilized since. This stock has been pushed around but its long-term strategy and outlook should prevail and move shares higher over time.
Bill Wilton is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Small Cap Trader service
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