Syniverse Holdings Inc. (SVR) shares have spiked on acquisition news and estimates are climbing.
Syniverse provides technology to the wireless communications industry. The company’s products provide a seamless global network by integrating multiple carriers’ networks.
Leading the Pack
Syniverse is the top rated company in its industry on Zacks.com. The company operates with a net profit margin of 15.5%, compared to the industry average 1.2%. Syniverse is returning 18.4% on equity, well above the 2.1% its peers normally generate.
Additionally, Syniverse carries a debt-to-equity ratio of 0.9 times, a third of the industry average. Shares are also a solid value at just 11 times earnings in a sector that often sees bloated valuations.
Making the Grade
On Aug 5 Syniverse met analysts’ expectations by reported net income of $25.4 million, or 34 cents per share after adjustments. Revenues and income are down year-over-year but the company sees plenty of opportunity in the future.
Tony Holcombe, President and CEO said, “Our transaction-based business continues to perform, and we continue to believe that the global surge in smartphone penetration, messaging and mobile data usage provides Syniverse with a solid operating environment.”
Following the earnings release analysts began raising full-year estimates. The Zacks Consensus Estimate for this year is up a nickel to $1.45
Next year’s estimates are averaging $1.76, up 19 cents. Given these numbers, growth is expected to tip this year before growing 21% next year.
Shares of SVR fell on the earnings news but rebounded sharply on news that the company would acquire VeriSign’s Messaging business. The group generated annual revenue of $140 million in the past year.