Seeking Alpha: PCTEL Struggling To Grow

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.

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PCTEL Struggling To Grow

Seeking Alpha: PCTEL Still Looking To Leverage Growing Wireless Opportunities

Three months ago, I thought that PCTEL (NASDAQ:PCTI) was an interesting, albeit high-risk, opportunity to play growth in antenna-based applications like WLAN and transportation and China's LTE rollout through antennas and test equipment. So far the early returns have not been encouraging, as the shares have lagged both the Nasdaq and antenna rival Laird (OTC:LAIRY). The underlying opportunity is still sizable, though, and the shares offer a worthwhile opportunity to leverage growth in antenna-based applications and eventual wireless deployments.

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PCTEL Still Looking To Leverage Growing Wireless Opportunities

Seeking Alpha: Will 2015 Be A Real Growth Year For PCTEL?

PCTEL (NASDAQ:PCTI) has been a frustrating stock for some time now. While the company has refocused around businesses with credible addressable markets and growth potential in antennas and test equipment, the stock has gone nowhere fast over the last three years (though to be fair, equipment/component supplier JDSU (NASDAQ:JDSU) has done even worse).

Will 2015 be a different, better, year for PCTEL's shareholders? China Mobile's (NYSE:CHL) more aggressive roll-out of TD-LTE is a real opportunity for the company, given its relationship selling scanning receivers used to test LTE deployments. A strong contribution from this higher-margin business would indeed be welcome, but PCTEL really needs to see markets like WLAN, smart grid, fleet management, and so on pick up (and use their antennas) to maintain that momentum. If PCTEL can leverage these opportunities, a share price above $10 seems reasonable in the near-term.

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Will 2015 Be A Real Growth Year For PCTEL?

Seeking Alpha: The Frustrating Wait For Value Realization At PCTEL

It is not too hard to see how PCTEL (NASDAQ:PCTI) could parlay billions of dollars of end-market potential in markets like smart grids, process automation, enterprise WLAN, precision agriculture, train control, and fleet management into potentially hundreds of millions of dollars of revenue. "Potential" is always a tricky word when it comes to small cap companies, though, and PCTEL doesn't have the best track record when it comes to delivering on its potential at any given point in its past.

PCTEL doesn't trade at particularly ambitious multiples, but then why would it? The company has been free cash flow positive for some time, but doesn't have any real record of attractive margins or returns on capital. I do believe that investors need to focus on where a company is going more than where it has been ("skate to where the puck is going to be"), but I have questions about PCTEL's ability to truly differentiate itself as a component supplier. I ultimately come down favorably inclined toward PCTEL, but near-term headwinds in wireless infrastructure spending could stretch out what has already been an extended wait for market-beating performance.

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The Frustrating Wait For Value Realization At PCTEL

Seeking Alpha: The Wait Goes On At PCTEL

PCTEL (PCTI) is the sort of tiny tech company that could generate substantial upside if things started clicking, but it has been a long, frustrating wait for that growth to materialize. The company's antenna (Connected Solutions) business has some legitimate addressable growth markets like process automation, precision agriculture, and positive train control, and the company's scanning receivers have substantial share (albeit in a small market). It also doesn't hurt that the company has been free cash flow positive.

Unfortunately, this somewhat thinly-traded, under-followed company isn't generating the strong quarter-in, quarter-out double-digit revenue growth that seems mandatory for most winning tech stocks. I still believe that the company can start reporting double-digit growth again before too long and that the shares are undervalued, but I have to acknowledge that owning these shares could be a frustrating experience for long stretches of time.

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The Wait Goes On At PCTEL

Seeking Alpha: PCTEL May Have The Right Combination For The Next Leg

I'm perfectly happy recycling past investment ideas, and PCTEL (PCTI) treated me quite well indeed when I owned the stock about a decade ago. Since that time, though, the company has gone through a significant transformation and is really only the same in name only. Different isn't always better, but I do believe that PCTEL now operates a collection of businesses with interesting growth and margin potential. PCTEL does not appear to be tremendously undervalued today on a cash flow basis, but with almost $3 per share in cash on the balance sheet further acquisitions could improve its growth prospects further.

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PCTEL May Have The Right Combination For The Next Leg

Investopedia: PCTEL May Be Signaling "Buy"

Investors aren't going to find too many small companies with PCTEL's (Nasdaq:PCTI) record of returning cash to shareholders. In addition to paying a special dividend a few years ago, the share count here has declined about 20% since 2007. All of this has been achieved despite a clear breakout product and the fact that revenue for 2011 was more than 10% below the level back in 2006.

Unfortunately, value-oriented tech companies seldom get their due. While PCTEL has a decent business in antennas and mobile network test equipment, it's going to take more than that to make the shares really exciting. Luckily for investors, there is an iron in the fire that just might make this a more interesting name in the future.

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