Q: Sangoma stock keeps moving higher. Time to jump back in based on the valuation alone?
5i Research Answer:
STC has had a nice run. On a valuation basis, P/E is still negative as STC is still expected to lose money this year and next. Price/Sales is still less than 1X. Debt is still high at $100M (net, 3X cash flow) but has declined. The last quarter was mixed and revenue was flat, but the stock has received some broker upgrades. The outlook calls for very low revenue growth, but lower losses. With its 47% gain this year, we like the momentum, but we would like to see better growth prospects and profitability before jumping in. The gain seems too much to us based on fundamentals.