Sierra Wireless (SWIR, Financial) cheered the market with its results, which reported significant growth year over year. It was mainly driven by its global leadership position in M2M segment along with solid performance from its acquired businesses. Led by these positives the stock rose considerably in the past year with even better prospects ahead. But the shares saw some decline since mid-December last year on account of a rating cut by RBC Capital . Let’s see whether or not Sierra will prove to be a profitable bet for investors in the days ahead.
Witnessing good improvements
Its revenue for the quarter rose 27.6% to $143.3 million from a year ago while earnings increased to 24 cents a share compared to 11 cents last year. During the quarter, Sierra continued its robust design win activity, which came from various market segments including energy, automotive, enterprise networking, mobile computing and insurance Telematics. The management says that its HL product line has played a significant role to bag these orders and would continue to be a growth driver in the future as well.
In its enterprise solutions, the company made good progress with In Motion Technology, which was acquired in March. It’s In Mobile gateway received great applause and has been utilized by various clients. For instance, the Westminster Police Department of Colorado selected In Motion mobile gateways for mission critical cellular connectivity to its police vehicles. And now, as the integration of In Motion technologies has been completed, it will further strengthen its business in the days to come.
Market leading position
The company enjoys a good leadership position in the M2M segment and is focused to enhance it even more. In this direction, Sierra recently acquired Wireless Maingate, a Sweden based provider of M2M connectivity and data management services. Maingate is a pioneer in offering wireless services with more than 500 customers across Europe, which in turn has a subscription base of over 500,000 connected devices. The deal was completed for $90 million and with the combined strength; Sierra will be able to offer its European customer base with complete device to cloud solutions in the future.
In addition, Sierra launched its AirLink Enterprise Connect during the quarter, which is a unique bundled solution for retail and branch locations in the United Kingdom, France and Germany. Using a 4G LTE wireless network, Enterprise Connect is a perfect tool that will allow branch office locations to get online and connected in minutes.
This is significant when dealing with critical activities such as payment processing, inventory management and other such functions. AirLink Enterprise Connect provides retailers, restaurant chains, kiosks, and small branch offices, a network connection that is extremely fast, flexible, and easy to set up. Solutions such as these will have great demand in the future and drive its top line in the days to come.
Conclusion
The company currently does not have any trailing P/E, but its forward P/E looks impressive at 32.83. It had a solid performance for the quarter and considering its organic growth and new acquisitions Sierra seems to be on track to continue its momentum in the coming years. The stock is currently declining but that seems to be only a sentiment negative on account the ratings downgrade. The company has strong fundamentals, which will be the decisive factor driving its stocks in the future.
