MIND C.T.I. Ltd.: Overlooked Penny Stock up 85% Since March Provides 10.3% Dividend

MNDO Stock MIND C.T.I. Ltd. Builds on Gains Following Strong Q2

Mind C.T.I. Ltd (NASDAQ:MNDO) is a great, yet overlooked tech stock that has seen its share price advance 85% since the markets bottomed in the spring.

Longer out though, MIND C.T.I. Ltd. has been providing buy-and-hold investors with solid returns. Since the start of 2014, the Yokneam, Israel-based penny stock has seen its share price climb 158%.

Despite the strong gains, its near-term and long-term outlook remains bullish.

A global provider of billing and customer care solutions, MNDO reported strong second-quarter results, with net income advancing 35% and earnings per share (EPS) climbing 40% year-over-year.

Perhaps most impressively, MIND C.T.I. Ltd. provides an annual dividend with an eye-watering 10.3% yield. The company declared a $0.24 dividend earlier this year. It only dishes out its annual dividend once a year. And MIND has done so for the last 17 years.


Chart courtesy of StockCharts.com

MNDO Stock Overview

Never has billing and customer care looked so fun! MIND C.T.I. Ltd. is a global provider of real-time, end-to-end billing and customer care solutions for voice, data, video, and content services.

MIND’s headquarters are in Israel, but it also has offices in Romania, Germany, and Silver Spring, Maryland. (Source: “About,” MIND C.T.I. Ltd., last accessed September 15, 2020.)

“MINDBill Essentials” is the company’s billing and customer care solution for mobile telecommunication service providers. The system supports prepaid and postpaid payment methods and targets residential and business customers.

“MessageMobile” allows businesses to communicate directly with their customers via instant messaging services, including “WhatsApp.”

“PhonEX ONE” is the comapany’s leading communication analysis and call accounting tool. PhonEX ONE provides in-depth analysis, reporting, traffic analysis, and fraud detection. So far, it has over 20,000 installations worldwide.

Strong Q2 Net Income and EPS Growth

On August 11, MIND C.T.I. Ltd. announced that revenue for the second quarter ended June 30 slipped 1.7% year-over-year to $5.6 million. (Source: “MIND CTI Reports Second Quarter 2020 Results,” MIND C.T.I. Ltd., August 11, 2020.)

Revenue from customer care and billing software totaled $3.0 million, accounting for 53% of total revenue. Enterprise messaging and payment solutions accounted for 35% ($2.0 million) of revenue, while enterprise call accounting software totaled $0.6 million, or 12% of total revenue.

The company reported second-quarter net income of $1.4 million, or $0.07 per share, versus $1.0 million, or $0.05 per share, in the same prior-year period.

Free cash flow was up eight percent at $1.2 million, while cash flow from operations increased 11% year-over-year to $1.3 million.

Monica Iancu, CEO, commented, “The decline in revenues in Q2 2020 was in line with our expectations as previously conveyed. The increase in net income reflects the measures applied in Q2 to reduce cost, such as the temporary part-time work that we enforced for two months in Q2, the low travel expenses as a result of travel limitations as well as the increase in financial income that fluctuates among quarters.”

For the first six months of 2020, revenues climbed 13.7% to $11.6 million. Net income inched up four percent to $2.6 million, or $0.13 per share. Cash flow from operations was down 32.2% at $2.3 million, while operating income climbed eight percent to $2.7 million, or 23% of total revenue.

Iancu concluded, “We are excited with the latest upgrade of an existing significant customer. We continue to invest in new technologies and expanding our platform to better support digital transformations. While we cannot estimate the impact of COVID-19 for the long term, we expect this year’s dividend to be similar to the previous year’s one, subject to Board approval.”

Analyst Take

A provider of real-time and offline convergent billing and customer care software solutions, MIND C.T.I. Ltd. is an under-the-radar tech stock that has been on a strong growth trajectory for the last number of years. It has a strong balance sheet and large international footprint and has streamlined operations to contend with the coronavirus. It also provides a frothy dividend of more than 10%, which can help during times of volatility.