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1. Company Snapshot

1.a. Company Description

Comtech Telecommunications Corp., together with its subsidiaries, designs, develops, produces, and markets products, systems, and services for communications solutions in the United States and internationally.It operates in two segments, Commercial Solutions and Government Solutions.The Commercial Solutions segment offers satellite ground station technologies, including single channel per carrier and time division multiple access modems, amplifiers, frequency converters, and network software to modulate, demodulate, and amplify signals, as well as to carry voice, video, and/or data over networks; and public safety and location technologies, such as 911 call handling and mapping solutions that allow cellular carriers and voice over the Internet carriers to deliver emergency calls to public safety emergency call centers.


The Government Solutions segment provides tactical satellite-based networks, such as satellite modems, ruggedized routers, and solid-state drives; sustainment services for the secret Internet Protocol router and non-classified Internet Protocol router access point; and small aperture terminals.This segment also offers high-performance transmission technologies that are used in communication systems comprising electronic warfare, radar, and identification friend or foe (IFF); troposcatter technologies for satellite communication; and high-power radio frequency microwave amplifiers and related switching control technologies that are used in electronic warfare, communications, radar, IFF, and medical applications.The company serves satellite systems integrators, wireless and other communication service providers, satellite broadcasters, prime contractors and system suppliers, medical equipment companies, aviation industry system integrators, oil companies, and domestic and international defense and government customers, as well as end-customers.


Comtech Telecommunications Corp.was founded in 1967 and is headquartered in Melville, New York.

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1.b. Last Insights on CMTL

Here is a 90-word analysis of the negative drivers behind Comtech Telecommunications Corp.'s recent stock performance: Comtech's Q1 loss of $1.27 per share, missing revenue estimates, and failure to file its Quarterly Report on Form 10-Q in a timely manner, led to a Nasdaq non-compliance notice. The company's former CEO, Ken Peterman, was also charged with insider trading, adding to the negative sentiment. Despite introducing a new Multipath Radio system and appointing a new independent director, David B. Kagan, to its Board, these positive developments were overshadowed by the company's poor earnings and regulatory issues.

1.c. Company Highlights

2. Comtech Shows Glimpsers of Turnaround Amid Ongoing Challenges

Comtech Telecommunications Corp. reported mixed results for its Q3 Fiscal 2025, with net sales of $126.8 million, down from the prior year, reflecting ongoing challenges in its Satellite and Space (S&S) segment. The company reported a GAAP loss per share of -$0.35, outperforming analyst estimates of -$0.57. Gross margin improved to 30.7%, while adjusted EBITDA rose to $12.6 million, up from the previous quarter. Operating loss narrowed to $1.5 million, and the company generated positive GAAP cash flow from operations of $2.3 million, marking its first positive cash flow quarter in eight.

Publication Date: Jun -16

📋 Highlights
  • Capital Infusion and Cost Reductions: - Comtech secured a $40 million capital infusion, renegotiated debt terms, and reduced annual labor costs by $33 million.
  • Positive Cash Flow: - Generated $2.3 million in positive GAAP cash flow from operations, the first positive quarter in eight.
  • Gross Margin Improvement: - Gross margin improved to 30.7%, with adjusted EBITDA rising to $12.6 million.
  • Bookings and Liquidity: - Gross bookings were $107.4 million, excluding a $36.4 million de-booking, with available liquidity of $27.3 million.
  • Segment Performance: - Terrestrial and Wireless segment performed well with higher NG-911 sales and strong EBITDA growth, while Satellite and Space saw improved bookings despite losing a low-margin contract.

Operational Progress and Strategic Initiatives

CEO Kenneth Traub emphasized the company's progress in its transformation plan, including a $40 million capital infusion, debt restructuring, and $33 million in annual labor cost reductions. The Terrestrial and Wireless (T&W) segment performed well, driven by higher sales of NG-911 services and strong EBITDA growth. However, the S&S segment faced headwinds, including the loss of a low-margin GFSR contract. Despite this, bookings in S&S improved, supported by the delivery of next-gen VSAT systems to a Navy partner. Comtech also appointed a new COO and is set to launch a next-gen 911 call handling solution, signaling its focus on innovation and operational efficiency.

Valuation and Financial Health

Comtech's valuation metrics reflect the market's cautious optimism about its turnaround. The company trades at a P/S ratio of 0.12, indicating undervaluation relative to its peers. However, its Net Debt/EBITDA of -0.99 highlights ongoing financial strain. While the company has made strides in improving liquidity, with $27.3 million in available liquidity, its high leverage and negative ROIC of -35.38% remain concerns. The lack of dividend yield further reflects its focus on reinvesting cash flow into the business.

Future Outlook and Risks

Comtech's progress in resolving long-standing challenges is encouraging, but risks persist. The company's reliance on government contracts and the competitive nature of its markets pose ongoing uncertainties. Despite this, its strong market positions, proprietary technology, and growing 5G opportunities provide a pathway to sustainable growth. Analysts expect revenues to decline by -3.0% next year, reflecting the ongoing transition and macroeconomic headwinds. Comtech's ability to execute on its transformation plan and capitalize on its growth opportunities will be critical in determining its long-term success.

3. NewsRoom

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Comtech Telecommunications Corp. (CMTL) Q4 2025 Earnings Call Transcript

Nov -10

Source: seekingalpha.com

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Comtech Announces Financial Results for Fourth Quarter and Fiscal Year 2025

Nov -10

Source: businesswire.com

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Allerium Secures Long-Term Agreement With Leading U.S. Wireless Service Provider

Nov -10

Source: businesswire.com

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Comtech To Host Fourth Quarter and Fiscal Year 2025 Earnings Conference Call

Nov -05

Source: businesswire.com

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Comtech's SLM-5650B Becomes First Sovereign-certified Modem to Operate on SES's O3b mPOWER MEO Satellite Constellation

Sep -10

Source: businesswire.com

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Comtech Appoints Lloyd A. Sprung to its Board of Directors

Aug -18

Source: businesswire.com

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Comtech Announces Amendment to Senior Secured Credit Agreement Which Improves Terms and Increases Financial Flexibility

Jul -21

Source: businesswire.com

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Comtech Announces Senior Leadership Appointments to Drive Growth of Satellite and Space Communications Segment

Jul -09

Source: businesswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.62%)

6. Segments

Satellite and Space Communications

Expected Growth: 4.5%

Comtech Telecommunications Corp.'s Satellite and Space Communications segment growth is driven by increasing demand for secure and reliable satellite-based communication solutions, government investments in space-based technologies, and expansion into new markets such as satellite-enabled 5G networks and IoT applications.

Terrestrial and Wireless Networks

Expected Growth: 4.8%

Comtech Telecommunications Corp.'s Terrestrial and Wireless Networks segment growth of 4.8% is driven by increasing demand for satellite-based communication solutions, expansion in government and defense contracts, and growing adoption of 5G and IoT technologies. Additionally, strategic acquisitions and investments in network infrastructure have enhanced the company's capabilities, contributing to its growth momentum.

7. Detailed Products

Satellite Modems

Comtech's satellite modems provide high-speed data transmission and are designed for use in a variety of applications, including government, defense, and commercial satellite networks.

Radar and Troposcatter Systems

Comtech's radar and troposcatter systems provide advanced radar and communication systems for military and government applications.

Public Safety and Location Technologies

Comtech's public safety and location technologies provide emergency response systems, 911 call handling, and location-based services.

Cyber Security Solutions

Comtech's cyber security solutions provide advanced threat detection, incident response, and penetration testing services.

Network and Communication Systems

Comtech's network and communication systems provide advanced communication networks and infrastructure for government and commercial applications.

Troposcatter Systems

Comtech's troposcatter systems provide high-capacity, long-distance communication systems for military and government applications.

Satellite Earth Station Equipment

Comtech's satellite earth station equipment provides advanced satellite communication systems for government and commercial applications.

8. Comtech Telecommunications Corp.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Comtech Telecommunications Corp. faces moderate threat from substitutes due to the availability of alternative communication technologies.

Bargaining Power Of Customers

Comtech Telecommunications Corp. has a diverse customer base, which reduces the bargaining power of individual customers.

Bargaining Power Of Suppliers

Comtech Telecommunications Corp. relies on a few key suppliers for critical components, giving them moderate bargaining power.

Threat Of New Entrants

The telecommunications industry has high barriers to entry, making it difficult for new entrants to compete with Comtech Telecommunications Corp.

Intensity Of Rivalry

The telecommunications industry is highly competitive, with many established players competing for market share, leading to a high intensity of rivalry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 28.07%
Debt Cost 8.64%
Equity Weight 71.93%
Equity Cost 11.72%
WACC 10.85%
Leverage 39.02%

11. Quality Control: Comtech Telecommunications Corp. passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Sonim Technologies

A-Score: 4.7/10

Value: 10.0

Growth: 4.2

Quality: 4.1

Yield: 0.0

Momentum: 10.0

Volatility: 0.0

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Harmonic

A-Score: 4.3/10

Value: 5.1

Growth: 6.0

Quality: 7.4

Yield: 0.0

Momentum: 2.0

Volatility: 5.3

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Ondas

A-Score: 4.0/10

Value: 6.0

Growth: 4.8

Quality: 3.1

Yield: 0.0

Momentum: 10.0

Volatility: 0.3

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Akoustis Technologies

A-Score: 3.5/10

Value: 10.0

Growth: 4.9

Quality: 5.1

Yield: 0.0

Momentum: 0.5

Volatility: 0.7

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Viasat

A-Score: 3.5/10

Value: 6.0

Growth: 1.9

Quality: 1.9

Yield: 0.0

Momentum: 10.0

Volatility: 1.0

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Comtech

A-Score: 2.9/10

Value: 9.8

Growth: 1.2

Quality: 3.5

Yield: 1.0

Momentum: 1.0

Volatility: 0.7

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

3.21$

Current Price

3.21$

Potential

-0.03%

Expected Cash-Flows