For Aggressive Investors: Syniverse Holdings, Inc.
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Where Roaming Pays Off
This column is for investors willing to take more risk and potentially receive more reward. The stocks mentioned in this column are not recommended to buy or sell. They're brought to your attention so you can investigate them further to determine if they fit your risk profile. Most of the stocks will have less than $1 billion of market capitalization, have more volatility than other stocks, and oftentimes no earnings. And some will have tremendous stories.
SVR
$21.13
Why It's Featured:Niche player in the telecom business with good growth ahead Danger Zones:Valuation a little high in some ratios; earnings volatility in the past.
Forward P/E
11
Earn. Growth
29%
Projected Sales Growth
28%
Market Cap.
1.5B
July 9, 2010 - Syniverse Holdings, Inc. (SVR-NYSE) provides wireless voice and data services for telecommunications companies worldwide. Its integrated suite of services include technology interoperability services, which enable the invoicing and settlement of domestic and international wireless roaming telephone calls and wireless data events.
The technology interoperability services comprise data clearinghouse services, messaging services, roaming facilitation, mobile data roaming, roaming data exchange, financial settlement services, and value-added roaming services, as well as inter-carrier gateway, picturemail, premium messaging gateway, and mobile enterprise solutions.
The company also provides network services, including operation of a signaling system 7 network that supports the call set-up, routing, and delivery of wireless and fixed line telephone calls, as well as supports access to intelligent network database services; Internet protocol networking services; intelligent network database services; and Internet protocol exchange transport services.
In addition, Syniverse Holdings offers number portability services that are used by wireless operators to enable wireless subscribers to switch service providers while keeping the same telephone number. Further, it provides wireless operators with global call handling and fraud management solutions that enable wireless subscribers from one operator to make and receive telephone calls while roaming on another operator's network.
It sells enterprise solutions, which allow wireless operators to offer billing consolidation and data management services to enterprise customers, as well as provides online reporting and analysis tools that enable enterprise customers to manage telecommunications-related costs; and offers customers the ability to connect to various third-party intelligent network database providers. The company was founded in 1987 and is headquartered in Tampa, Florida.
Things are looking up at Syniverse. The first quarter showed impressive gains over the first period of last year: Earnings went to 45 cents a share, up from 33 cents last year. Revenues hit $149 million, well above the $108.9 million of last year's first quarter. Sales were better in the roaming and messaging offerings. Roaming revenues increased world wide while the messaging department had a record number of transactions. Both bode well for this year's total numbers.
Last year, earnings fell behind 2008, finishing at $1.51, down from $1.63. This year, 12 analysts predict $1.89, then $2.08 in 2011. Next earnings will be out on August 2 for the second quarter. Look for 46 cents compared to 37 cents last year in the second. In the last 2 quarters, the company beat anlaysts' expectations by 27.80% and 9.80% respectively.
Analysts see continued gains for roaming and messaging. They forecast higher roaming clearing house volume, especially for the company's UniRoam service which is used for interstandard roaming. Messaging volume should be helped by VeriSign, an acquisition the company made last year. With its successful integration, SVR can now pursue messaging markets globally, no matter how small or large.
SVR has a new alliance with RealNetworks, a provider of an intercarrier short message service (SMS) platform that allows peer-to-peer messaging. This is becoming the most preferred method of communication among mobil device users (especially the younger users who no longer use email as their main communication). Look for volume to rise dramatically in this division.
More numbers: Price to sales ratio is 2.75. Price to book is 2.23. Book value is $9.24. Operating margin for the last 12 months was 28.42% while Profit margin was 13.43%. Return on equity was 11.94% and Return on assets was 7.46%. Total revenue was $523.08 million. There's $95.82 million in cash for $1.37 share. Total debt is $505.29 million or 44% of capital. Current ratio is 3.55. Beta is .28. There are 69.72 million shares outstanding with a Float of 66.82 million. Insiders own 3.82% of the stock. Institutions own 96.10% of the float. There is no dividend.
This stock should have positive growth for some time. Communicating through messaging and calling world wide is becoming the norm. This company facilitates both, no matter what network the user uses. While there's plenty of competition, Syniverse is gaining market share through acquisitions and innovation.
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