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Sangoma Technologies is on a roll and the stock is up 240%
Posted by: Gerry Wimmer
5/22/2017
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TOP IDEAS: Sangoma Technologies Corp.'s (TSXV: STC) revenue growth and profits are gaining momentum and more small cap investors should start taking notice.





Investorfile's share price accumulation target of $0.40 for Sangoma Technologies Corp. was reached on April 24, 2014. For the record, we do not revise share price targets for our Investorfile Top Ideas - Small Cap Value Stocks. We have positioned our blog to be one of the first providers of a pragmatic perspective of a small cap company stock's potential worth, where there may be uncovered value that has been largely overlooked by the investment community.


The Investorfile blog first took notice of Sangoma Technologies Corp. (TSXV: STC - C$0.71) at C$0.21 per share over three years ago (See: Sangoma Technologies: A small cap tech stock trading for value with prospects of growth). Just three months ago we took notice again with the shares trading at C$0.43 (See: Sangoma Technologies’ stock price has room to double again).Today the stock trades at C$0.71, up 240% since we first recommended Sangoma Technologies to our list of Top Ideas. Based on recent financial trends, we remain bullish as ever on the Company and its stock as a small cap investment opportunity.

Sangoma Technologies delivers Unified Communications solutions for SMBs, Enterprises, OEMs, Carriers and service providers. The Company’s scalable offerings include both on-premises and cloud-based phone systems, telephony services and industry-leading Voice-Over-IP solutions which, together, provide seamless connectivity between traditional infrastructure and new technologies. Sangoma's products and services are used in leading PBX, IVR, contact centre, carrier networks and data communication applications worldwide.

The biggest growth engine is Sangoma’s Software as a Service (SaaS) and Cloud-based services, as a provider of Unified Communications solutions that earns predictable recurring streams of revenues. Unified Communications (UC) has become the buzz word for an emerging market in the telecommunications industry, which implies the integration between modes of communications like text messages, cell phone, emails, conference calls, instant messaging, screen sharing etc., as well as being able to switch effortlessly between them to enhance the exchange of information and ideas for a business operation.

Last week Sangoma Technologies released its Q3 results for fiscal 2017. In Q3, Sangoma reported that quarterly revenues jumped 29% to C$6.81 million. This was the ninth quarter in a row that the Company has grown its revenues significantly and consistently over the same quarter in the prior year. Both EBITDA (10.7% of revenues) and net earnings are up considerably, too. Earnings per share in the quarter doubled.

Most interestingly in the Q3 report was the Company’s earnings guidance for Fiscal 2017. Sangoma’s Management stated that the previous annual revenue guidance of C$25 million and EBITDA of C$2.4 million will now be exceeded. Fiscal 2017 ends on June 30.

Despite the stock's recent performance, the share price still trades at a multiple that is less than one times revenues based on Management’s financial guidance. Given that the Company is growing and profitable, Sangoma’s stock price is still notably undervalued. That said, the stock should begin to attract new investors throughout the balance of 2017 which could reward its current shareholders with ample share price appreciation.

If you don’t own Sangoma’s stock yet it may be time to do so.

Sangoma Technologies maintains a strong balance sheet with a healthy net cash position.

The Company has approximately 32.4 million shares outstanding.

Sangoma Technologies website: www.sangoma.com

Author Ownership Disclosure: TSXV: STC - Yes


Read Disclaimer:

This article is for informational purposes only. This article is based on the author's independent analysis and judgment and does not guarantee the information's accuracy or completeness. The information contained in this article is subject to change without notice, and the author assumes no responsibility to update the information contained in this article. The information contained within this article should not be construed as offering of investment advice. Those seeking direct investment advice, should consult a qualified, registered, investment professional. This is not a direct or implied solicitation to buy or sell securities. Readers are advised to conduct their own due diligence prior to considering buying or selling any stock.

Investorfile.com is not engaged in an investor relations agreement with Sangoma Technologies Corporation nor has it received any compensation from Sangoma Technologies Corporation for the preparation or distribution of this article.

The author of this article has acquired and may trade shares of Sangoma Technologies Corporation through open market transactions and for investment purposes only.

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Gerry: Thanks for small cap stock suggestions over the past 5-years. Your record is very impressive and your analysis has been excellent over the years. I think small investors (and fund managers) should pay much more attention to your work. I look forward reading your blog over the next 5-years!