NasdaqGM Tech Industry: A Deep Dive Into Communications Systems Inc (JCS)
Communications Systems Inc (NASDAQ:JCS), is a USD$40.84M small-cap, which operates in the tech hardware industry based in United States. Technology has become a vital component of every industry, bringing unprecedented opportunities for growth, along with challenges and competition Tech analysts are forecasting for the entire hardware tech, industry, a somewhat weaker growth of 2.65% in the upcoming year, and an overall negative growth rate in the next couple of years. Unsuprisingly, this is below the growth rate of the US stock market as a whole. Today, I’ll take you through the tech sector growth expectations, as well as evaluate whether JCS is lagging or leading in the industry. See our latest analysis for JCS
What’s the catalyst for JCS's sector growth?
Despite all the opportunities, tech companies still face a host of challenges, including coping with an increasingly burdensome global regulation. Since the regulatory environment is unlikely to become less complex, organizations will need to address the constantly evolving rules for governing privacy, security and handling of data, as well as cybersecurity issues. Over the past year, the industry saw growth of 2.47%, though still underperforming the wider US stock market. JCS leads the pack with its impressive earnings growth of 8.18% over the past year. This proven growth may make JCS a more expensive stock relative to its peers.
Is JCS and the sector relatively cheap?
The tech hardware industry is trading at a PE ratio of 29x, above the broader US stock market PE of 22x. This means the industry, on average, is relatively overvalued compared to the wider market. However, the industry returned a similar 8.50% on equities compared to the market’s 9.99%. Since JCS’s earnings doesn’t seem to reflect its true value, its PE ratio isn’t very useful. A loose alternative to gauge JCS’s value is to assume the stock should be relatively in-line with its industry.
What this means for you:
Are you a shareholder? JCS recently delivered an industry-beating growth rate in earnings, which is a positive for shareholders. If you’re bullish on the stock and well-diversified by industry, you may decide to hold onto JCS as part of your portfolio. However, if you’re relatively concentrated in tech, you may want to value JCS based on its cash flows to determine if it is overpriced based on its current growth outlook.
Are you a potential investor? If JCS has been on your watchlist for a while, now may be the time to enter into the stock, if you like its ability to deliver growth and are not highly concentrated in the tech industry. Before you make a decision on the stock, take a look at JCS’s cash flows and assess whether the stock is trading at a fair price.
For a deeper dive into Communications Systems's stock, take a look at the company's latest free analysis report to find out more on its financial health and other fundamentals. Interested in other tech stocks instead? Use our free playform to see my list of over 1000 other tech companies trading on the market.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
