Wireless modems connect people all over the world with mobile broadband networks that keep them in touch, informed, and productive from wherever they need to be. There is an outfit in Richmond, British Columbia that was instrumental in developing early wireless data devices and now its modems ship to some big name clients.
Sierra Wireless (NASDAQ: SWIR) is engaged in the development and marketing of wireless communications modems. Its products permit laptop computers, handheld mobile computing devices and vehicle-based systems to access wireless data and voice communications networks. Sierra's devices are used primarily by businesses and government organizations to enable their employees to connect with the Internet, e-mail, corporate intranets, remote databases and computer-aided dispatch units. Customers include AT&T (NYSE: T), Sprint Nextel (NYSE: S) and Verizon Communications (NYSE: VZ).
The firm pleased investors last week, when it reported Q3 EPS of 33 cents and revenues of $111.5 million. Analysts had
been expecting 28 cents and $109.7 million. Management also guided Q4 EPS to 42 cents (28 cent consensus) and Q4 revenues to $125 million ($115.84M consensus). Piper Jaffray and RBC Capital Markets subsequently upgraded the shares to "outperform". The share price popped on the news and then moved into a bullish "flag" consolidation pattern. Stocks frequently exit flags moving in the same direction they were traveling on entry. In this case, that would be to the upside.
Altogether, brokers now recommend the shares with one "strong buy", four "buys" and four "holds". The SWIR Price to Sales ratio (1.73), Price to Book ratio (3.22), Price to Cash Flow ratio (17.64), Sales Growth rate (112.22%), EPS Growth rate (690.89%) and Revenue per Employee ($1.38 million) compare favorably with industry, sector and S&P 500 averages. Institutions hold about 44% of the outstanding shares. Over the past 52 weeks, the stock has traded between $11.77 and $28.10. A stop-loss of $20.00 looks good here.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.
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