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Is now the time to buy Netcomm Wireless Ltd shares?

The share price of broadband telecommunications infrastructure provider Netcomm Wireless Ltd (ASX: NTC) fell 5.4% on Friday to $2.46 in response to the release of the group’s interim financial results.

With the stock well down from its recent high of $3.67, long-term investors should be asking themselves if this is an opportunity to acquire a growth stock at a reasonable price…

Here are the highlights from Netcomm’s half year report for the six months ending December 31:

  • Revenue increased 54% to $40.6 million
  • Earnings before interest, tax, depreciation and amortisation (EBITDA) leapt 123.5% to $5.1 million (management noted that this EBTDA figure was after $2 million of business reinvestment)
  • Net profit after tax (NPAT) soared 539% to $2.3 million
  • No dividend was declared with the board choosing to retain cash for further business reinvestment

A bright outlook

While it is still early days, the recent announcement by Netcomm that it has signed an agreement with one of the two largest USA-based telco carriers regarding USA rural broadband is set to see the group expand its operations into the USA and will have it following in the footsteps of other leading ASX-listed technology businesses such as ResMed Inc. (CHESS) (ASX: RMD) and Cochlear Limited (ASX: COH).

Given the significant savings which can be attained by utilising fixed wireless broadband technology rather than expensive fibre-to-the-node or fibre-to-the-home cabling, Netcomm could have a long runway of growth opportunities ahead of it.

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Motley Fool contributor Tim McArthur has no position in any stocks mentioned. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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