RADCOM Ltd. (RDCM – Free Report) stock has proved to be resilient amid a volatile market environment with a 52.9% gain in the past year, outperforming its industry, the Zacks Computer and Technology sector and the S&P 500 composite’s growth of 15.9%, 35.5% and 26%, respectively. The stock has risen 21.5% in the past three months.
Image Source: Zacks Investment Research
It closed the last session at $12.15, down from its 52-week high of $12.84. Does this recent pullback indicate a buying opportunity? Let us evaluate the pros and cons of RDCM and decide the best course of action for your portfolio.
RDCM’s Innovation in 5G and AI Bode Well
Radcom continues to lead in 5G and artificial intelligence (AI) innovation, with its RADCOM ACE platform addressing operator challenges in 5G standalone deployments and cloud migration. The integration of AI-driven solutions enhances operational efficiency, helping operators reduce costs and improve network performance. The acquisition of Continual in 2023 has proven successful, contributing to revenues and opening new sales opportunities.
During the third quarter, Radcom released several product enhancements aligned with 5G trends. A significant highlight of the quarter was securing a “seven-figure multi-year contract with the North American operator” for advanced 5G mobility experience analytics, demonstrating the company’s strong market presence and technological edge. With strong relationships with strategic customers like AT&T, DISH and Rakuten Mobile, and a focus on automated, cloud-based solutions, Radcom is well-positioned for continued growth, market share expansion and increased profitability heading into 2025.
Operational Efficiency Drives RDCM’s Margin Expansion
RDCM’s non-GAAP gross margin was 75% in the third quarter of 2024. The company expects that the fourth-quarter number will be similar.
RDCM’s non-GAAP operating income was $2.6 million, up 92% year over year in the third quarter of 2024. Operating margin improved 7% year over year to 17%. Increased revenues and prudent expense management resulted in the uptick.
RDCM’s Technical Indicators & Valuation
RDCM presents a compelling investment opportunity with its attractive forward 12-month price-to-earnings ratio of 14.29, lower than the industry average of 19.49 a year ago.
Image Source: Zacks Investment Research
Technical indicators are also supportive of RDCM’s strong performance. The stock is trading above its 50 and 100-day moving averages, indicating upward momentum and price stability. This technical strength indicates positive market perception and confidence in its growth prospects.
Image Source: Zacks Investment Research
Estimate Revisions for RDCM
In the past 60 days, though analysts have lowered their earnings estimates for the current quarter by 5%, the same for the next quarter has not changed. Earnings estimates for the current and the next year have been revised upward by 3.9% and 3.7%, respectively.
Image Source: Zacks Investment Research
RDCM’s Outlook Shows Promise
In the third quarter, Radcom achieved record quarterly revenues of $15.8 million. Driven by healthy momentum, RDCM has raised its revenue guidance for full-year 2024 to $59-$62 million from the previous guidance of $58-$61 million. This reflects the company’s confidence in its ability to achieve a fifth consecutive year of revenue growth and increased profitability.
How Should Investors Play RDCM Stock?
Backed by strong fundamentals, this Zacks Rank #2 (Buy) stock appears primed for further appreciation. The company has an average brokerage recommendation (ABR) of 1 on a scale of 1 to 5 (Strong Buy to Strong Sell). ABR is the calculated average of actual recommendations made by brokerage firms and portends the future potential of the stock.
Other Stocks to Consider
Some other top-ranked stocks from the broader technology space are Ubiquiti Inc. (UI – Free Report) , InterDigital, Inc. (IDCC – Free Report) and Intrusion Inc. (INTZ – Free Report) . UI and IDCC presently sport a Zacks Rank #1 (Strong Buy), whereas INTZ carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
The Zacks Consensus Estimate for Ubiquiti’s fiscal 2025 earnings per share (EPS) is pegged at $7.30. In the last reported quarter, Ubiquiti delivered an earnings surprise of 20.9%. Its shares have surged 156.9% in the past year.
The Zacks Consensus Estimate for InterDigital’s 2024 EPS is pegged at $15.19, unchanged in the past 30 days. IDCC earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 163.7%. The company’s long-term earnings growth rate is 15%. Its shares have jumped 67.4% in the past six months.
INTZ’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 43.06%. In the last reported quarter, Intrusion delivered an earnings surprise of 16.67%. Its shares have surged 278.4% in the past six months.
Financial Market Newsflash
No financial news published today. Check back later.
