About a year ago, I thought PCTEL (NASDAQ:PCTI)
could be an interesting overlooked opportunity if the company could
take advantage of its growth opportunities in WLAN, fleet management,
train control, and LTE build-outs. Unfortunately, those opportunities
really haven't materialized, and the company has seen organic revenue
weaken considerably, taking margins along for the ride.
With the shares down almost 40% since my last piece,
a lot of damage has already been done. Looking ahead, the market seems
to be anticipating very little revenue growth and/or no margin leverage.
That is probably an overly grim assessment, but it is very difficult
for me to look at this company's history of poor revenue growth, weak
margin leverage, and poor returns on invested capital and say that
investors should make the leap of faith that PCTEL will return to
growth. The potential may be there, and management has a commendable
record of returning capital to shareholders, but I can't see a reason to
own until there is at least stability in the organic revenue
trajectory.
Read the full article here:
PCTEL Struggling To Grow
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