SSNI
If anyone is interested in SSNI and hasn’t yet read Bert’s article from a couple of days ago, I recommend it. Here’s a brief summary, but you should read it all.
In the smart grid and smart meter universe they won all three huge mega-deals that came on the market thus far in 2016. This gives them further momentum, as if you were another utility looking for someone to supply smart meters, you’d know that although they are a small company, they have already been well vetted. It adds a bit of a moat.
Its secret sauce is its networking technology software, which is additional moat.
Some of its competitors have been unsuccessful in building out large networks without lengthy installation periods. This is very important. SSNI has know-how too.
Its financials do not really represent the potential financial impact that the mega deals will add over the years. For example, its recurring revenue line is growing, but doesn’t yet reflect the larger transactions.
It has a strong international pipeline but it has not yet closed huge deals there so far this year. (Pilots in London and Paris)
It is continuing to work with municipalities to roll out large intelligent street lamp deployments.
Its new CEO, Mike Bell, may be an important factor in its success in the closure of mega deals. He helps in a sales capacity as well as overseeing development projects. Coming from Intel and Apple, he lends gravitas.
Bert points out that there is no realistic way to quantify the case to buy these shares. No one is buying them because of their current earnings or cash flow, but EV/S at less than 2X is quite low given their “real” growth. And reported revenues, showing 3-4% growth, is out of step with the large awards the company has closed. He concludes that investors will simply have to decide on the basis of limited data that SSNI is one of the leading players in a space that will transform the landscape over the next several years.
I think of it like how smart phones replaced dumb phones all over the world in 10 years, once they got started.
Read the whole article: http://seekingalpha.com/article/4001362-silver-spring-networ…
Saul