AVNW Stock Still Trading at a Discount
Aviat Networks Inc (NASDAQ:AVNW) has been having a great fiscal 2021. The company reported record first- and second-quarter financial results and it continued to execute on its key long-term growth drivers in the third quarter, which led to another quarter of exceptionally strong results.
Aviat Networks is a developer of advanced microwave technology used in wireless infrastructure.
Thanks to a number of key customer wins, the company has increased its share of demand in rural broadband. Moreover, Aviat Networks Inc is well positioned to benefit from meaningful government funding, including the $9.0-billion 5G Fund for Rural America and the $20.0-billion Rural Digital Opportunity Fund.
As of this writing, Aviat Networks stock is up by:
- 82% year-to-date
- 214% year-over-year
- 775% since bottoming in March 2020
Despite these market-trouncing gains, AVNW stock still has lots of room to run. In fact, Aviat Networks stock needs to climb by more than 40% to get to its April 2021 high of $43.76.
Wall Street thinks it will get there soon. Of the analysts providing a 12-month price forecast for Aviat Networks Inc, their median target is $51.00 and their high target is $57.00, which represents growth of 64% and 84%, respectively.
Chart courtesy of StockCharts.com
AVNW Stock Overview
Aviat Networks supplies microwave networking solutions that are critical to 5G networks, private networks, and rural broadband. While 5G presents a large and growing opportunity, rural broadband also provides Aviat with significant growth opportunities. (Source: “Aviat Networks(NASDAQ:AVNW) 49th Annual Cowen,” Aviat Networks Inc, last accessed July 8, 2021.)
The company’s end-to-end wireless transport solutions portfolio consists of radios, routers, software, and services. Aviat’s products are used by the offshore oil and gas industry; the transportation sector; schools; Internet service providers; high-frequency traders; federal, state, and local government agencies; and broadcast network operators around the world.
Aviat Networks Inc’s recent 5G customer wins include DISH Network Corp (NASDAQ:DISH), Safaricom, and Globe. Its new rural broadband customers include Nextlink Internet, LTD Broadband, and Union Wireless.
Since the start of fiscal 2020, Aviat has inked more than 100 new rural broadband accounts. The company also recently announced the Virginia State Police as a private network customer.
Strong Q3 Results
In May, Aviat Networks announced that its revenue for the third quarter of fiscal 2021, ended April 2, 2021, increased by eight percent year-over-year to $66.4 million. The company’s sales from North America went up by 12.8% to $42.0 million, while its international sales advanced 1.1% to $24.4 million. (Source: “Aviat Networks Announces Fiscal 2021 Third Quarter and Nine Month Financial Results,” Aviat Networks Inc, May 5, 2021.)
The company reported third-quarter net income of $94.7 million, or $8.00 per share, compared to $700,000, or $0.07 per share, in the same prior-year period. The third quarter of 2021 was favorably impacted by the release of a U.S. valuation allowance of $92.2 million.
Aviat Networks Inc reported adjusted net income of $5.8 million, or $0.49 per share, versus third-quarter 2020 adjusted net income of $2.2 million, or $0.20 per share.
The company’s adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for the fiscal 2021 third quarter were $7.3 million, a 108% improvement over the $3.5 million in the comparable period of fiscal 2020.
The company ended the third quarter with $45.8 million in cash and no debt.
Aviat Networks stock is an excellent overlooked 5G stock with great long-term growth potential. The company reported record first- and second-quarter results and strong third-quarter results, and it continues to have a rock-solid balance sheet.
As for the future, Aviat Networks Inc is well positioned for long-term growth. The company says 5G wireless transport will grow by a five-year compound annual growth rate (CAGR) of 41%. Increased demand for critical communications in private networks is projected to expand at a CAGR of 13.2%.
Rural broadband growth is exceptionally strong, with more than $30.0 billion of U.S. investment expected to drive further growth. Global initiatives to connect emerging economies will also drive growth.