Five9 Has Vast Potential to Appreciate
When you hear the term “call centers,” you probably envision a setting with rows and rows of cubicles, and hundreds of people talking at the same time. While this may not be that far off, the key factor is that these call centers require great software to power the ability to deliver effective solutions between the company and customer.
In the small-cap technology space, an up-and-coming company that is worth a look is Five9 Inc (NASDAQ:FIVN). With a share price of around $20.77 and a market cap of around $1.1 billion, it is outperforming the S&P 500 with a 46% advance this year, and is delivering alpha to investors.
What makes Five9 stock intriguing is its cloud-based platform used by third-party or company-operated customer contact centers to make contact more effective.
The call center segment is massive. Every company, regardless of size, needs an effective strategy to deal with any issues that a customer may face.
One issue is the fact that many companies are still using old and slow legacy systems, unwilling or unable to build an advanced contact solutions system.
This is where Five9 comes in, with its “Virtual Contact Center” that is scalable and secured, whether the contact is through voice, chat, e-mail, web, social media, or mobile.
The solution allows companies to provide the best customer care without having to invest major capital in-house. Five9 counts in excess of 2,000 clients globally.
The Fundamental Bull Case for Five9 Stock
Revenues have risen in 2015 and 2016 along with gross profits and expansion in gross margins.
Five9 Gross Margins
Five9’s ability to drive gross margins suggests effective cost control, which is key for smaller growth companies.
The average estimate is that revenues are slated to rise another 20.1% to $194.7 million in 2017 and 17.6% to $228.98 million in 2018. (Source: “Five9, Inc. (FIVN),” Yahoo! Finance, last accessed August 25, 2017.)
Five9 had been losing money, but is expected to make as much as $0.04 per diluted share this year and $0.16 per diluted share in 2018 on the high point.
The company’s quarterly results have been stellar, with four consecutive earnings per share (EPS) beats of 100% each. Earning $0.07 in the first half of the year, Five9 is set to beat the consensus view this year.
Chart courtesy of StockCharts.com
Technically, FIVN stock has been on a steady climb at above the 50-day moving average, with several upside breakouts. The company operates in an intriguing niche, and I feel there is excellent potential to capture more business in what is a growing market. As far as a price target, FIVN stock faces resistance at $25.00, with a sustained break toward $30.00 over the next few years.