Thursday, June 4, 2020

Comtech Telecommunications Corp. (CMTL)

What Does A Full Quarter of COVID Look Like?

Comtech Telecommunications Corp. engages in the design, development, production, and marketing of products, systems, and services for advanced communications solutions in the United States and internationally. It operates in three segments: Telecommunications Transmission, Mobile Data Communications, and RF Microwave Amplifiers. The Telecommunications Transmission segment provides satellite earth station equipment and systems, over-the-horizon microwave systems, and forward error correction technology, which are used in various commercial and government applications, including backhaul of wireless and cellular traffic, broadcasting (including HDTV), IP-based communications traffic, long distance telephony, and secure defense applications. The Mobile Data Communications segment provides mobile satellite transceivers, and computers and satellite earth station network gateways and associated installation, training, and maintenance services; supplies and operates satellite packet data networks, including arranging and providing satellite capacity; and offers microsatellites and related components. The RF Microwave Amplifiers segment designs, develops, manufactures, and markets satellite earth station traveling wave tube amplifiers (TWTA) and broadband amplifiers. Its amplifiers are used in broadcast and broadband satellite communication; defense applications, such as telecommunications systems and electronic warfare systems; and commercial applications comprising oncology treatment systems, as well as to amplify signals carrying voice, video, or data for air-to-satellite-to-ground communications. The company serves satellite systems integrators, wireless and other communication service providers, broadcasters, defense contractors, military, governments, and oil companies. Comtech markets its products through independent representatives and value-added resellers. The company was founded in 1967 and is headquartered in Melville, New York.

Joe Gomes, Senior Research Analyst, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

3Q20 Results. Comtech's fiscal third quarter, ended April 30th, coincided almost perfectly with the worst of the COVID crisis. This can be seen in the financial results. Revenue declined nearly 21% year-over-year to $135.1 million and down 16% sequentially. The actual result was even below our adjusted revenue projection of $142 million. GAAP net loss totaled $0.16 per share, compared to net income of $0.31 per share last year and our estimate of a loss of $0.09 per share.

But Not All Is Bad. While the quarter was a disappointment, especially given from where original expectations were, there were a number of bright spots. In the Commercial Solutions segment, the NG-911 and location services businesses continue to perform well. Even in the hard hit satellite ground station technologies business there are positive signs. Demand for almost all mission critical technologies and...

This research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst certification and important disclosures included in the full report.  NOTE: investment decisions should not be based upon the content of this research summary.  Proper due diligence is required before making any investment decision.