Game-changing technologies like chatGPT are hitting tipping points for mass adoption. The tech industry is in a favorable position to reap long-term benefits due to constant advancements and the rising need for digital transformation across various industries.
As the industry shows solid potential, fundamentally strong tech stocks Motorola Solutions, Inc. (MSI), Ribbon Communications Inc. (RBBN), and AudioCodes Ltd. (AUDC) might be solid buys.
The introduction of blockchain technology has been a game-changer, transforming how we approach data storage and transactions. Moreover, the development of standard tools, like ChatGPT, is making it easier for developers of all levels to work with blockchain technology.
Gartner predicts spending to reach $4.5 trillion in 2023, a 2.4% rise from previous years.
John-David Lovelock, Distinguished VP Analyst at Gartner, said, “Consumers and enterprises are facing very different economic realities. While inflation is devastating consumer markets, contributing to layoffs at B2C companies, enterprises continue to increase spending on digital business initiatives despite the world economic slowdown.”
Let’s discuss the stocks mentioned above in detail:
Motorola Solutions, Inc. (MSI)
MSI provides public safety and enterprise security solutions in the United States, the United Kingdom, Canada, and internationally. The company operates in two segments, Products and Systems Integration; and Software and Services.
On May 2, 2023, MSI launched its next-generation V700 body camera with mobile broadband capabilities to give public safety agencies another critical source of real-time field intelligence and collaboration. The V700 seamlessly integrates with Aware, a cloud-based platform that provides a common operating view - as well as the M500 in-car video system, APX radios, and Holster Aware sensors.
This ecosystem of connected technologies offers command staff officer location and multiple points-of-view of an incident as it unfolds to improve response and officer safety.
Its trailing-12-month EBITDA margin of 28.05% is 201.5% higher than the 9.30% industry average. Its trailing-12-month net income margin of 14.63% is 461.1% higher than the 2.61% industry average.
MSI pays a $3.52 per share dividend annually, translating to a 1.24% yield on the current price. Its dividend payments have grown at a CAGR of 11.3% over the past three years. The company has a four-year average dividend yield of 1.39%.
During the fiscal first quarter ended March 31, 2023, MSI’s net sales increased 14.7% year-over-year to $2.17 billion. Net earnings attributable to MSI grew 4.1% year-over-year to $278 million, while its earnings per common share increased 4.5% year-over-year to $1.61.
MSI’s EPS is expected to increase 21.6% year-over-year to $2.52 for the fiscal second quarter ending June 2023. The company’s revenue for the same quarter is expected to increase 10.3% year-over-year to $2.36 billion. Additionally, it has topped consensus revenue and EPS estimates in each of the trailing four quarters, which is impressive.
Shares of MSI have gained 41.8% over the past year to close the last trading session at $286.57.
MSI’s POWR Ratings reflect its promising outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
The stock has a B grade for Sentiment, Growth, and Quality. It is ranked #9 out of 51 stocks in the Technology - Communication/Networking industry.
Beyond what is stated above, we’ve also rated MSI for Value, Stability, and Momentum. Get all MSI ratings here.
Ribbon Communications Inc. (RBBN)
RBBN provides communications technology in the United States, Europe, the Middle East, Africa, the Asia Pacific, and internationally. It operates through two segments, Cloud and Edge; and IP Optical Networks.
On April 25, RBBN announced that Valley Telecommunications, a South Dakota provider of telephone, Internet, and television services, has selected Ribbon to upgrade its network and provide a tenfold increase in bandwidth for local residents and businesses.
On April 24, RBBN announced that kölbi Negocios, a Costa Rica-based Grupo ICE company that offers cutting-edge electricity and telecommunications solutions, has deployed Ribbon Connect for Microsoft Teams Direct Routing.
Its trailing-12-month gross profit margin of 52.23% is 5.7% higher than the 49.43% industry average. Its trailing-12-month asset turnover ratio of 0.68x is 9.9% higher than the 0.62x industry average.
RBBN’s revenues rose 7.5% year-over-year to $186 million in the fiscal second quarter that ended March 31, 2023. Non-GAAP net loss decreased 25% year-over-year to $3 million, while its non-GAAP loss per share decreased 75% year-over-year to $0.02.
Street expects RBBN’s revenue for the fiscal second quarter ending June 2023 to increase 2.7% year-over-year to $211.41 million. The company’s EPS for the same quarter is expected to come in at $0.04. Additionally, it has topped consensus EPS estimates in three of the trailing four quarters.
The stock has gained 2% over the past six months to close the last trading session at $2.59.
RBBN’s robust prospects are reflected in its POWR Ratings. The stock has an overall B rating, equating to a Buy in our proprietary rating system.
RBBN has an A grade for Growth, Value, and Sentiment. It is ranked #10 in the same industry.
Click here to see the additional POWR Ratings for RBBN (Momentum, Stability, and Quality).
AudioCodes Ltd. (AUDC)
Headquartered in Lod, Israel, AUDC vides advanced communications software, products, and productivity solutions for the digital workplace. The company offers solutions, products, and services for unified communications, contact centers, VoiceAI business line, and service provider businesses.
AUDC’s trailing-12-month gross profit margin of 64.99% is 31.4% higher than the 49.47% industry average. Its trailing-12-month asset turnover of 0.82x is 10% higher than the 0.62x industry average.
AUDC pays $0.36 annually as dividends which translates to a yield of 3.66% at the current price. Its 4-year average dividend yield is 1.29%. Its dividend has grown at a CAGR of 12.9% over the past three years.
AUDC’s services revenues increased 10.8% to $30.52 million in the first quarter that ended March 31, 2022. Also, its gross profit came in at $36.54 million. Its non-GAAP net earnings per share came in at $0.08.
AUDC’s revenue is expected to come in at $60.36 million for the fiscal second quarter ending June 2023. The company’s EPS for the same quarter is expected to be $0.10.
AUDC declined 1.6% intraday to close its last trading session at $9.83.
AUDC’s POWR Ratings reflect its robust outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
AUDC also has an A grade for Quality and a B for Value. It is ranked #6 in the same industry.
For additional ratings for AUDC’s Growth, Momentum, Stability, and Sentiment, click here.
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MSI shares were unchanged in premarket trading Wednesday. Year-to-date, MSI has gained 11.57%, versus a 7.86% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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