Fools,
It looks like SWIR is indeed priced quite reasonably. Here are some observations:
During the previous 4 quarters the Adjusted P/E was between 36 & 78. If the adjusted earnings come in as expected, according to analysts (using Drake’s numbers), the potential price range assuming the same range is pretty impressive (see below) with the low already shown around the recent price.
If the 1 Yr. Peg stays around 1 (P/E & Growth at about the same level) to the end of 2016, there is upside to about $55 - $60 (same assumptions on earnings). Naturally, growth could be higher. The P/E has been much higher, which could lead to significant appreciation.
Month EPS TTM EPS QoQ Gr Hi Lo Close P/E P/E Hi P/E Lo 1Yr. Peg
Mar-12 0.16 $8.41 $6.77 $7.32
Jun-12 0.30 $9.77 $6.70 $9.03
Sep-12 0.29 $9.83 $7.67 $7.78
Dec-12 0.33 1.08 $8.40 $7.42 $7.94 7.4 7.8 6.9
Mar-13 0.09 1.01 -43.8% $12.18 $7.63 $10.59 10.5 12.1 7.6 -0.24
Jun-13 0.03 0.74 -90.0% $13.03 $9.85 $12.80 17.3 17.6 13.3 -0.19
Sep-13 0.14 0.59 -51.7% $16.75 $12.02 $16.37 27.7 28.4 20.4 -0.54
Dec-13 0.10 0.36 -69.7% $24.25 $15.50 $24.17 67.1 67.4 43.1 -0.96
Mar-14 0.02 0.29 -77.8% $26.65 $18.14 $21.83 75.3 91.9 62.6 -0.97
Jun-14 0.08 0.34 166.7% $24.21 $16.98 $20.17 59.3 71.2 49.9 0.36
Sep-14 0.24 0.44 71.4% $30.55 $18.50 $26.74 60.8 69.4 42.0 0.85
Dec-14 0.29 0.63 190.0% $49.13 $22.65 $47.39 75.2 78.0 36.0 0.40
Mar-15 0.22 0.83 1000.0% $48.30 $31.40 $33.09 39.9 58.2 37.8 0.04
====================================================================================
Jun-15 0.23 0.98 187.5% $76.42 **$35.23** $35.23 36.0 78.0 36.0 0.19
Sep-15 0.30 1.04 25.0% $81.10 $37.39 $37.39 36.0 78.0 36.0 1.44
Dec-15 0.35 1.10 20.7% $85.78 $39.55 $39.55 36.0 78.0 36.0 1.74
Mar-16 0.30 1.18 36.4% $92.02 $42.42 $42.42 36.0 78.0 36.0 0.99
Jun-16 0.32 1.27 39.8% $99.16 $45.71 $45.71 36.0 78.0 36.0 0.90
Sep-16 0.42 1.39 39.8% $108.46 $50.00 $50.00 36.0 78.0 36.0 0.90
Dec-16 0.49 1.53 39.8% **$119.32 $55.00** $55.00 36.0 78.0 36.0 0.90
Here are running numbers of various company elements that can paint an interesting picture. Some quick observations:
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OEM Revenues and revenue growth exceed those of Enterprise. But Enterprise gross margins are higher. This could lead to some margin compression going forward, unless Enterprise revenues grow faster.
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YoY growth may be slowing down a bit. But it’s too early to tell with just these few data points.
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Earnings are accelerating (expected growth in FY16 is just under 40%). But I haven’t put enough thought or research into whether or not this will continue if revenue growth slows and margins compress.
Feel free to add any other comments or observations. 
Rev Mar Jun Sep Dec GM Mar Jun Sep Dec Grth Mar Jun Sep Dec
2012 92.3 95.4 100.2 109.4 2012 30.2% 31.6% 31.0% 33.1% 2012
2013 101.4 109.6 112.3 118.6 2013 32.9% 33.3% 33.2% 32.4% 2013 9.8% 14.9% 12.1% 8.4%
2014 121.2 135.0 143.3 149.1 2014 31.9% 32.1% 32.9% 33.5% 2014 19.5% 23.2% 27.6% 25.7%
2015 150.4 2015 32.4% 2015 24.1%
2016 2016 2016
2017 2017 2017
OEMRev Mar Jun Sep Dec GM Mar Jun Sep Dec Grth Mar Jun Sep Dec
2012 80.1 83.3 88.3 94.9 2012 27.3% 29.4% 28.4% 30.4% 2012
2013 89.2 95.1 95.9 101.9 2013 29.8% 31.1% 30.7% 29.0% 2013 11.4% 14.2% 8.6% 7.4%
2014 106.2 116.6 124.3 129.6 2014 28.8% 28.9% 29.7% 30.4% 2014 19.0% 22.6% 29.7% 27.2%
2015 133.0 2015 30.0% 2015 25.3%
2016 2016 2016
2017 2017 2017
EntRev Mar Jun Sep Dec GM Mar Jun Sep Dec Grth Mar Jun Sep Dec
2012 12.2 12.1 11.9 14.5 2012 49.2% 46.5% 50.3% 50.8% 2012
2013 12.2 14.5 16.4 16.8 2013 55.6% 47.6% 48.1% 53.3% 2013 -0.5% 20.0% 37.8% 15.3%
2014 15.0 18.4 18.9 19.5 2014 53.8% 52.4% 53.7% 54.2% 2014 23.3% 27.0% 15.4% 16.4%
2015 17.4 2015 51.1% 2015 15.8%
2016 2016 2016
2017 2017 2017
AEarn Mar Jun Sep Dec TTM Mar Jun Sep Dec WA Shrs Mar Jun Sep Dec
2012 -2.81 -3.38 1.25 4.49 2012 -0.4 2012 30.573 30.774
2013 -0.71 1.05 3.48 3.12 2013 1.7 6.1 8.3 6.9 2013 30.695 30.768 31.176 30.804
2014 0.48 2.59 7.68 9.09 2014 8.1 9.7 13.9 19.8 2014 31.235 31.446 31.582 31.759
2015 7.18 2015 26.5 24.0 16.3 7.2 2015 31.983
2016 2016 0.0 0.0 0.0 0.0 2016
2017 2017 0.0 0.0 0.0 0.0 2017
AEPS Mar Jun Sep Dec TTM Mar Jun Sep Dec Cash Mar Jun Sep Dec
2012 -0.09 -0.11 0.04 0.15 2012 -0.01 2012 $123.2 $59.5 $63.6
2013 -0.02 0.03 0.11 0.10 2013 0.06 0.20 0.27 0.22 2013 $55.9 $166.6 $183.2 $177.4
2014 0.02 0.08 0.24 0.29 2014 0.26 0.31 0.44 0.63 2014 $151.3 $168.4 $196.1 $207.1
2015 0.22 2015 0.83 0.75 0.51 0.22 2015 $99.6
2016 2016 0.00 0.00 0.00 0.00 2016
2017 2017 0.00 0.00 0.00 0.00 2017
Unfortunately, this sheet is in draft form. I should have it cleaned up and double-checked after the next earnings release, at which time I’ll put it on Google Sheets and provide a link.
So my initial thought is that SWIR is a pretty good buy right now, based primarily on the business doing well and the historical valuation range.
Even with a relatively low P/E, the stock could appreciate about 50% by the end of next year, far exceeding Saul’s goal of 30% annually. I don’t like the revenue growth slowing and the high-margin business being lower growth. But these observations could be wrong. Let’s see what happens when they report this quarter’s numbers and provide their outlook.
DJ
