Acme Packet, Inc. (APKT) just hit a new all-time high at $62.96. With revenue surging on increased market penetration and a bullish growth projection, this Zacks #1 rank stock introduces a high flyer to momentum.
Company Description
Acme Packet, Inc. is a technology and software company that provides data transfer and communication tools across IP (Internet Protocol) networks worldwide. The company was founded in 2000 and has a market cap of $3.65 billion.
In spite of nosebleed valuations, tech stocks continue to be hot as investors rotate into riskier segments of the market on a global economic recovery. The same is true of APKT, recently hitting a new all-time high after reporting strong results in late October that handily beat expectations.
Third-Quarter Results
Revenue for the period was up 56% from last year to $56.6 million. Earnings came in at 15 cents, directly in line with the Zacks Consensus Estimate but more than double last year’s 6 cents. Including the match, APKT has an average earnings surprise of 38% over the last four quarters.
Acme noted that it added 71 new customers during the quarter, including 31 service providers and 41 enterprise customers, boosting its total customer base to more than 1,200 in 100 countries. One of Acme’s new customers was China Mobile, the world’s largest mobile network.
The company also launched its new Powered by Acme Packet Program that it believes will grow its presence in the small and medium enterprise markets.
Financial Profile
Acme also has a great balance sheet, with cash and equivalents of $111 million and no debt.
Estimates
Estimates inched higher on the news, with the current year adding 2 cents to 60 cents and the next-year estimate gaining 11 cents to 87 cents, a bullish 43% growth projection.
Valuation
But in light of recent gains, the valuation picture looks a bit hot, with a forward P/E of 70X.
2-Year Chart
APKT recently hit a new all-time high after posting big gains in late 2010. The stochastic below the chart says shares are still trading away from overbought territory. Look for support from the long-term trend line on any weakness, take a look below.
Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the new Zacks Momentum Trader Service.
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