Q: With a decent dividend yield a person can be more patient to see growth materialize, but am looking for your input on this stock, and their recent earnings.
5i Research Answer:
SFTC is now trading at 13.6x times' Forward P/E. In the 1Q, SFTC’s revenue declined 19% to $169.8M, missing estimates of $202.5M and EPS was $0.07 missing estimates of $0.14. The balance sheet is strong, with a net debt/EBITDA of 0.8x. SFTC generates healthy cash flow with limited capex requirements, the company also pays a dividend along with mild buyback. Based on consensus estimates, sales are expected to grow by 2% this year and start to grow stronger in FY2025. Overall, the quarter was not great, missing both the top and bottom line, but the dividend is well-covered (payout ratio less than 20% last year) and the stock has shown good momentum this year. We think the low valuation can afford investors to have some patience here.