Ceragon Networks Ltd. reports 48.1% Net Income growth in 2018 and 3.6% Revenue growth
02/20/2019 • About Ceragon Networks Ltd. (
$CRNT) • By InTwits
Ceragon Networks Ltd. reported 2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: 9.9% in 2018, 9.7% in 2017, 10.1% in 2016, 9.7% in 2015, 0.8% in 2014
- Ceragon Networks Ltd. has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.7%. At the same time it's a lot of higher than industry average of 8.7%.
- CAPEX is quite volatile: $1m in FY2018, $1m in FY2017, $1m in FY2016, $1m in FY2015, $1m in FY2014
- The company has highly profitable business model: ROIC is 17.6%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue increased on 3.6%. Revenue growth showed slowdown in 18Q4 - it was -1.1% YoY. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 2.3 pp from 3.6% to 5.8% in 2018.
Gross Margin increased slightly on 1.5 pp from 32.3% to 33.8% in 2018. SG&A as a % of Revenue showed almost no change in 2018.
Net Income margin increased on 2.0 pp from 4.7% to 6.7% in 2018. Net Income margin followed a growing trend in the last 5 years.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 3.0% in 2018. Ceragon Networks Ltd.'s CAPEX/Revenue increased slightly on 1.5 pp from 1.5% in 2015 to 3.0% in 2018. For the last three years the average CAPEX/Revenue was 2.8%.
Return on investment
The company operates at good ROIC (17.6%) and ROE (15.7%). ROIC increased slightly on 1.4 pp from 16.2% to 17.6% in 2018. ROE increased on 3.3 pp from 12.4% to 15.7% in 2018. ROE pursued a growing trend in 2014-2018.
Leverage (Debt)
The company has no debt. Cash surged on 37.5%.
Valuation and dividends
The company's trades at EV/EBITDA 7.7x and P/E 12.8x.
Financial and operational results
FY ended 12/31/2018
Ceragon Networks Ltd. ($CRNT) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 371.1 | 349.4 | 293.6 | 332.0 | 343.9 | 3.6% |
| Gross Profit | 84.4 | 102.9 | 99.2 | 107.3 | 116.2 | 8.2% |
| SG&A | 79.7 | 62.1 | 59.9 | 60.2 | 62.3 | 3.5% |
| EBITDA | 3.0 | 33.8 | 29.5 | 32.4 | 33.9 | 4.8% |
| Net Income | -76.5 | 1.0 | 11.4 | 15.6 | 23.0 | 48.1% |
Balance Sheet
|
|---|
| Cash | 41.4 | 36.3 | 36.3 | 25.9 | 35.6 | 37.5% |
| Short Term Debt | 48.8 | 34.9 | 17.0 | 0.0 | 0.0 | |
| Long Term Debt | 2.1 | 0.0 | 0.0 | 0.0 | 0.0 | |
Cash flow
|
|---|
| Capex | 12.7 | 5.3 | 8.2 | 8.5 | 10.3 | 20.7% |
Ratios
|
|---|
| Revenue growth | 2.6% | -5.8% | -16.0% | 13.1% | 3.6% | |
| EBITDA growth | -131.8% | 1,009.1% | -12.6% | 9.6% | 4.8% | |
|
|---|
| Gross Margin | 22.8% | 29.5% | 33.8% | 32.3% | 33.8% | 1.5% |
| EBITDA Margin | 0.8% | 9.7% | 10.1% | 9.7% | 9.9% | 0.1% |
| SG&A, % of revenue | 21.5% | 17.8% | 20.4% | 18.1% | 18.1% | -0.0% |
| Net Income Margin | -20.6% | 0.3% | 3.9% | 4.7% | 6.7% | 2.0% |
| CAPEX, % of revenue | 3.4% | 1.5% | 2.8% | 2.6% | 3.0% | 0.4% |
|
|---|
| ROIC | -5.8% | 13.8% | 13.2% | 16.2% | 17.6% | 1.4% |
| ROE | -63.8% | 1.0% | 10.4% | 12.4% | 15.7% | 3.3% |
| Net Debt/EBITDA | 3.1x | -0.0x | -0.7x | -0.8x | -1.0x | -0.2x |
Ceragon Networks Ltd. ($CRNT) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 83 | 88 | 87 | 86 | | 9.5% | -5.4% | 13.9% | -1.1% |
| EBITDA | 7 | 8 | 10 | 9 | | 59.9% | -18.0% | 26.8% | -13.0% |
| Net Income | 2 | 3 | 6 | 12 | | | -35.2% | 75.9% | 60.9% |
Balance Sheet
|
|---|
| Cash | 26 | 29 | 41 | 36 | | -28.8% | -13.8% | 13.3% | 37.5% |
| Short Term Debt | 0 | 0 | 0 | 0 | | -100.0% | -100.0% | -100.0% | |
| Long Term Debt | 0 | 0 | 0 | 0 | | | | | |
Ratios
|
|---|
| Gross Margin | 33.1% | 32.5% | 35.0% | 34.4% | | 3.8% | 1.3% | -0.1% | 0.8% |
| EBITDA Margin | 8.3% | 9.5% | 11.5% | 10.1% | | 2.6% | -1.5% | 1.2% | -1.4% |
| Net Income Margin | 2.5% | 3.7% | 7.1% | 13.5% | | 2.7% | -1.7% | 2.5% | 5.2% |
Peers in Communications Equipment
Below you can find Ceragon Networks Ltd. benchmarking vs. other companies in Communications Equipment industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Ribbon Communications Inc. ($RBBN) | | | | 30.6% | 75.2% |
| Extreme Networks, Inc. ($EXTR) | | 6.4% | -4.4% | 13.2% | 64.4% |
| Optical Cable Corporation ($OCC) | | -11.3% | -12.2% | -0.8% | 37.0% |
| ParkerVision Inc ($PRKR) | | | 37,601.2% | -97.5% | 35.0% |
| Network-1 Technologies, Inc. ($NTIP) | | 34.6% | 292.9% | -74.7% | 34.4% |
| |
|---|
| Median (66 companies) | | 0.7% | 7.6% | 5.1% | 2.8% |
|---|
| Ceragon Networks Ltd. ($CRNT) | | -5.8% | -16.0% | 13.1% | 3.6% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| F5 Networks, Inc. ($FFIV) | 82.1% | 82.7% | 83.1% | 83.1% | 83.3% |
| Radware Ltd. ($RDWR) | 82.1% | 82.4% | 81.8% | 81.3% | 82.2% |
| Radcom Ltd. ($RDCM) | 63.2% | 76.8% | 69.6% | 71.8% | 74.0% |
| Casa Systems, Inc. ($CASA) | | 70.8% | 69.1% | 73.4% | 73.4% |
| NetScout Systems, Inc. ($NTCT) | 78.7% | 79.2% | 65.6% | 70.2% | 72.4% |
| |
|---|
| Median (67 companies) | 42.4% | 44.0% | 43.9% | 41.7% | 41.2% |
|---|
| Ceragon Networks Ltd. ($CRNT) | 22.8% | 29.5% | 33.8% | 32.3% | 33.8% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Network-1 Technologies, Inc. ($NTIP) | 35.5% | 33.7% | 50.6% | 37.8% | 42.8% |
| InterDigital, Inc. ($IDCC) | 50.8% | 58.1% | 73.6% | 67.3% | 41.9% |
| EchoStar Corporation ($SATS) | 25.7% | 39.7% | 40.3% | 38.1% | 37.4% |
| Ubiquiti Networks, Inc. ($UBNT) | 34.7% | 25.5% | 37.3% | 34.3% | 32.8% |
| Ituran Location and Control Ltd. ($ITRN) | 32.4% | 30.5% | 29.9% | 29.9% | 30.4% |
| |
|---|
| Median (65 companies) | 5.6% | 4.7% | 5.5% | 6.0% | 4.6% |
|---|
| Ceragon Networks Ltd. ($CRNT) | 0.8% | 9.7% | 10.1% | 9.7% | 9.9% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Resonant Inc. ($RESN) | | | 132.5% | 124.8% | 245.2% |
| ViaSat, Inc. ($VSAT) | 22.8% | 26.5% | 26.7% | 33.0% | 32.1% |
| Applied Optoelectronics, Inc. ($AAOI) | 31.5% | 30.1% | 19.0% | 17.5% | 26.9% |
| EchoStar Corporation ($SATS) | 19.7% | 43.8% | 39.9% | 30.9% | 26.5% |
| Finisar Corporation ($FNSR) | 11.3% | 11.9% | 9.4% | 9.7% | 16.8% |
| |
|---|
| Median (65 companies) | 2.2% | 2.3% | 1.9% | 1.8% | 1.6% |
|---|
| Ceragon Networks Ltd. ($CRNT) | 3.4% | 1.5% | 2.8% | 2.6% | 3.0% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| F5 Networks, Inc. ($FFIV) | 33.9% | 40.8% | 43.1% | 46.9% | 47.9% |
| Ubiquiti Networks, Inc. ($UBNT) | 61.4% | 31.5% | 41.5% | 38.5% | 39.1% |
| Motorola Solutions, Inc. ($MSI) | -16.1% | 18.9% | 26.4% | 39.5% | 35.3% |
| Ituran Location and Control Ltd. ($ITRN) | 50.9% | 46.8% | 50.1% | 48.5% | 35.1% |
| Casa Systems, Inc. ($CASA) | | | 43.2% | 39.7% | 21.9% |
| |
|---|
| Median (70 companies) | 2.1% | 2.0% | 2.2% | 2.1% | 0.3% |
|---|
| Ceragon Networks Ltd. ($CRNT) | -5.8% | 13.8% | 13.2% | 16.2% | 17.6% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Extreme Networks, Inc. ($EXTR) | | | -2.2x | -1.5x | 7.1x |
| ViaSat, Inc. ($VSAT) | 3.4x | 2.5x | 3.2x | 2.5x | 5.8x |
| CommScope Holding Company, Inc. ($COMM) | 2.3x | 9.6x | 4.3x | 4.6x | 4.4x |
| Inseego Corp. ($INSG) | | | | | 3.9x |
| Finisar Corporation ($FNSR) | -0.3x | 0.2x | -0.5x | 1.6x | 3.8x |
| |
|---|
| Median (45 companies) | -0.8x | -0.8x | -0.9x | -0.6x | 0.2x |
|---|
| Ceragon Networks Ltd. ($CRNT) | 3.1x | -0.0x | -0.7x | -0.8x | -1.0x |
