With its shares down 36% in the last six months, shareholders of Netcomm Wireless Ltd (ASX: NTC) have not had much to smile about recently.
But that could be about to change following an announcement this morning from the wireless internet provider.
As we wrote in November, NetComm has penned a deal to supply distribution point units and services to the National Broadband Network (NBN) company.
This morning NetComm revealed that is has received its first order commitment from the NBN worth an estimated $28 million in revenue.
The order is subject to successful readiness review testing by the NBN company in April, with delivery then expected to occur between June and August 2017.
NetComm's share price rallied as much as 16.5% in early trade after the announcement. At the time of writing its shares have given back some of the early gains and sit higher by around 9%.
Acting CEO Mr Ken Sheridan had this to say on the order:
"NetComm Wireless' receipt of this initial order commitment from nbn is a very positive start to our execution of this significant contract, and builds on our strong existing relationship with nbn. We expect to quickly move to a monthly supply of Distribution Point Units as the nbn ramps up its installation of this new technology."
Should you invest?
I believe this first order shows just how lucrative the deal with the NBN could be over the next few years as the broadband network rolls out.
Whilst NetComm is well positioned to grow on the back of this, its shares are changing hands at an astronomical 110x trailing earnings.
With so much growth already baked into the share price, it's not a share I would buy today. As we have seen countless times in recent months, failure to live up to the high expectations of the market can lead to a severe haircut for shareholders.
Instead I would suggest investors look at other shares that look set to benefit from the NBN roll out such as Amaysim Australia Ltd (ASX: AYS) and Vocus Group Ltd (ASX: VOC).
Both shares look to be great value for money, especially considering their growth potential.
