Amber Road Inc: Why Amber Road Stock Could Surge on Trade Deals

Amber Road Inc (NYSE:AMBR) Could Benefit Huge From Trade Deals
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Amber Road Could Be a Big Winner From Trade

The one-year-plus trade war between the U.S. and China may be finally coming to a resolution over the next few weeks, but not before negatively impacting global trade.

And even if the China situation is dealt with, consider that there are still trade issues with Europe, Japan, and other countries. The hope is that the freedom of fair global trade will again surface and this will help companies like Amber Road Inc (NYSE:AMBR).

The micro-cap business offers a cloud-based platform that helps companies navigate the complexity of global trading and shipping, given the tariffs and logistics. Trade data is provided on over 160 countries so businesses can make good decisions. Amber’s clients are found in over 80 countries.

AMBR stock has rallied off its December low of $7.60 and is approaching its 52-week high of $10.41 from October 2018. Over the past year, Amber Road stock is down 0.1% and is worth a look at for traders.

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My bull thesis for AMBR stock is dependent on the resolution of the various trade issues.

The below long-term weekly chart of Amber stock displays the breakdown since trading above $20.00 in February 2018:

Chart courtesy of StockCharts.com

The Fundamentals Support a Higher AMBR Stock Price

The rate of revenue growth doesn’t stand out, but Amber Road Inc has been a model of consistency, with growth over five straight years:

Fiscal Year Revenue (Millions) Growth
2014 $64.8 23.4%
2015 $67.1 3.5%
2016 $73.2 9%
2017 $79.1 8.1%
2018 $85.2 7.8%

(Source: “Amber Road Inc.,” MarketWatch, last accessed May 3, 2019.)

Amber is expected to continue with its revenue growth, at 5.7% to $90.1 million in 2019 and at 6.2% to $95.7 million in 2020. A resolution to the global trade issues could lift these estimates. (Source: “Amber Road, Inc. (AMBR),” Yahoo! Finance, last accessed May 3, 2019.)

The company has not produced positive earnings before interest, taxes, depreciation, and amortization (EBITDA) in five straight years, but there were improvements from 2015 to 2017:

Fiscal Year EBITDA (Millions) Growth
2014 -$20.8 -110.5%
2015 -$20.7 0.2%
2016 -$10.7 45.4%
2017 -$6.0 44%
2018 $6.9 -14.6%

(Source: MarketWatch, op cit.)

A major plus is that Amber Road Inc managed to narrow its diluted generally accepted accounting principles (GAAP) loss from 2015 to 2017, prior to recording a small increase in 2018. (Source: Yahoo! Finance, op cit.)

Fiscal Year GAAP Diluted Earnings Per Share Growth
2014 -$1.46 -50.5%
2015 -$1.07 26.7%
2016 -$0.70 34.6%
2017 -$0.47 32.9%
2018 -$0.49 -4.0%

(Source: MarketWatch, op cit.)

If everything goes to plan, Amber Road could cut its adjusted loss to $0.03 per diluted share in 2019 and generate profits of $0.03 in 2020.

The company has beaten the consensus quarterly earnings per share in 12 of the past 15 quarters.

Amber’s balance sheet is sound, and it managed to squeeze out positive free cash flow (FCF) in 2018, including three straight years of growth.

Fiscal Year FCF (Millions) Growth
2014 -$9.0
2015 -$16.5 -83.2%
2016 -$2.7 83.8%
2017 -$2.4 11.1%
2018 $0.1 104.8%

(Source: Ibid.)

Analyst Take

For a micro-cap, Amber Road stock has strong institutional ownership, with 113 institutions holding 81.7% of the company’s outstanding shares.

Furthermore, insiders have been actively buying AMBR stock. Over the last six months, insiders bought 891,901 shares while selling 187,607 shares. (Source: Yahoo! Finance, op cit.)

In my view, I like the business of Amber Road Inc and feel there could be big returns down the road once the global trade situation gets sorted out.