Ceragon Networks: Undervalued And Positioned For Continued Upside

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Ceragon Networks Ltd. (CRNT) is a key player in wireless backhaul solutions, showing strong global presence and impressive financial performance, particularly in India and North America.Q3 results ...

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(CRNT) is a key player in wireless backhaul solutions, showing strong global presence and impressive financial performance, particularly in India and North America.Q3 results ...</p>\n\n<a href=\"https://seekingalpha.com/article/4739357-ceragon-networks-undervalued-and-positioned-for-continued-upside\">Source Link</a>\n\n</div>\n","source":"seekingalpha","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Ceragon Networks: Undervalued And Positioned For Continued Upside</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nCeragon Networks: Undervalued And Positioned For Continued Upside\n</h2>\n\n<h4 class=\"meta\">\n\n\n2024-11-22 00:54 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4739357-ceragon-networks-undervalued-and-positioned-for-continued-upside><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Ceragon Networks Ltd. (CRNT) is a key player in wireless backhaul solutions, showing strong global presence and impressive financial performance, particularly in India and North America.Q3 results ...</p>\n\n<a href=\"https://seekingalpha.com/article/4739357-ceragon-networks-undervalued-and-positioned-for-continued-upside\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"CRNT","symbol_name":"Ceragon网络","start_time":0,"source_url":"https://seekingalpha.com/article/4739357-ceragon-networks-undervalued-and-positioned-for-continued-upside","article_id":"2485122754","we_media_id":null,"thumbnails":["https://static.seekingalpha.com/cdn/s3/uploads/getty_images/2030192156/image_2030192156.jpg"],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2485122754","pubTimestamp":1732208061,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"Ceragon Networks Ltd. (CRNT) is a key player in wireless backhaul solutions, showing strong global presence and impressive financial performance, particularly in India and North America.Q3 results hig","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"CRNT":"Ceragon网络","BK4020":"通信设备"},"translate_title":"Ceragon Networks：被低估并有望持续上涨","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"CRNT":0.9},"content_text":"Ceragon Networks Ltd. (CRNT) is a key player in wireless backhaul solutions, showing strong global presence and impressive financial performance, particularly in India and North America.Q3 results highlight a 17.7% revenue increase and significant profitability gains, with non-GAAP net income rising to $14.1 million from $5.0 million.Despite margin pressures and reliance on key customers, Ceragon's innovative product pipeline and undervalued P/E ratio make it an attractive buy for value investors.With a firm foothold in the 5G market and strong growth potential, Ceragon is well-positioned for long-term success despite some geographic and market challenges.   imaginima Thesis Ceragon Networks Ltd. (NASDAQ: NASDAQ:CRNT), an Israeli company founded in 1996, is a solidly established player in the field of wireless backhaul solutions. Their expertise lies in crafting high-capacity communication systems that help cellular operators and wireless providers deliver voice and data services. Their reach is impressively global, spanning North America, Europe, Africa, the Asia-Pacific region, the Middle East, India, and Latin America. Ceragon’s product lineup — the IP-20 and IP-50 platforms — boasts impressive versatility. They can be deployed in just about any way you can imagine: all-outdoor, split-mount, or all-indoor setups. These systems handle everything from short-haul and long-haul connections to fronthaul, small cells, routing, and enterprise access. Seeking AlphaSince the last Seeking Alpha article on this stock, it had a brief but ultimately unsuccessful flirtation with the $3 price range. Things have gotten more interesting since the Q3 earnings announcement, though, with trading volume picking up and the stock seemingly eyeing its late March highs once again. So, here I am, digging into what might be driving this newfound momentum and, more critically, trying to figure out if it has legs. Impressive Financial Performance Seeking AlphaLet’s kick things off with Ceragon’s Q3 results, where the numbers tell a pretty upbeat story. Revenue jumped 17.7% year-over-year to $102.7 million, and their full-year revenue guidance projects growth of 12% to 15%, typically a strong signal that the company is feeling confident about maintaining its momentum. The profitability side was no less impressive. Non-GAAP gross profit rose 15.9% to $35.2 million, while non-GAAP operating income more than doubled, reaching $15.8 million and posting a 15.4% margin, up significantly from 9.2% this time last year. Non-GAAP net income, meanwhile, climbed to $14.1 million, or $0.16 per diluted share, compared to just $5.0 million, or $0.06 per share, a year ago. India: A Growth Powerhouse Nearly half of Ceragon’s revenue came from India, where they hit record numbers, pulling in $50.5 million from business spread across three major customers. During the conference call, management seemed reasonably upbeat about this trend, projecting strong demand to carry on into 2025, driven by the ongoing expansion of 4G and 5G networks. Adding to the mix, demand for E-band technology is expected to ramp up significantly in the second half of 2025. A solid chunk of these impressive India numbers (about a third) was bolstered by more than $18 million in orders from a single new customer. Basically, E-band is catching on because it can handle way more data than the older microwave bands (6–38 GHz), which are getting crowded and have pretty small channels — think 7 to 56 MHz. E-band, on the other hand, has much bigger channels, up to 2,000 MHz, so it can move data extremely fast, like 10 Gbps or more. This is important for 5G, which needs to be fast and smooth, especially in busy places like cities in India where tons of people are using data at the same time, and, simultaneously, it helps those mobile networks (Ceragon's clients) look good in the process by being faster and more reliable. The main point here is that India has become a huge market for Ceragon, thanks to the rapid rollout of 4G and 5G networks, more people using smartphones, and the rise of data-heavy apps. Between April and June 2024, India used a massive 58,183 petabytes (PB) of wireless data, which is up 6.74% from the 52,636 PB used the previous quarter. A big chunk of this growth came from 5G, which made up 11,383 PB or about 19.6% of all wireless data during that time. And this isn’t slowing down. According to Ericsson, India’s mobile data usage is expected to keep growing at about 20% per year through 2029. North America’s Private Networks In North America, things are going pretty well too. They pulled in $24.5 million in revenue, thanks to a growing focus on private networks. The sales team seems to be hitting their stride with a mix of direct deals, distributor partnerships, and an overall knack for squeezing more efficiency out of the sales process which helped them add four new customers in Q3 and bring in an extra $11.5 million in bookings. Private network deals are expected to keep growing, with projects ranging from a few million dollars to big jumps of up to 50% through extra work requests. There’s strong demand in defense, public safety, energy, and government sectors. They’re also making progress with international defense markets with a hopeful eye on cracking the U.S. defense market once all the red tape is cleared. Driving Innovation Forward To keep things moving, Ceragon knows it needs to stay innovative, and they’re doing just that. They’ve rolled out the IP-50EX and are drumming up excitement for the IP-50EX Premium and IP-100E, which, if all goes well, should help them achieve double-digit growth in the millimeter wave market, well ahead of the sluggish single-digit growth the rest of the market is managing. Management expects that the new products should help them grab more market share and possibly boost profit margins, too. On top of that, their Neptune-based products have gotten some good early feedback. Revenue from those should start rolling in by late 2025, with an extra $50–$150 million expected over the next 2–3 years, thanks to Siklu technology which Ceragon bought in 2023. Financial and Operational Gains The company’s operational tweaks seem to be paying off quite nicely. For starters, cash reserves have climbed to a tidy $34 million, and they’ve shifted into a positive net cash position of $8.8 million. Adding to the good news, inventory has slimmed down to $59.8 million, helped along by better access to components and some smart management decisions. With better cash flow, the company now has more room to breathe. They can pay down debt, consider buying other businesses, and keep operations running smoothly. It’s all part of their plan to hit a long-term profit margin of 35%–38%. On top of that, they brought in $10.7 million in cash from their operations, which helped them keep chipping away at their low debt. Alongside these updates, Ceragon adjusted its revenue expectations for the year, narrowing the range but sticking with a midpoint target of $395 million. Even with the adjustments, they’re staying firm on their goal of hitting at least 10% non-GAAP operating margins. Undervalued Opportunity for Investors Fast GraphsCRNT’s blended P/E ratio is 9.45x, which is way below its fair value of 15.00x and even its usual 13.97x. I think that this kind of gap makes it a pretty attractive option for value investors looking for good deals in the Communications Equipment industry, especially with room for big gains. Basically, this could be a great time to jump in. With an adjusted earnings growth rate of 12.80%, Ceragon seems to be holding its own in a competitive market. Pair that with a 10.58% EPS yield, and you’ve got a company with some rather promising growth potential. There’s no dividend, but that’s par for the course with small-cap companies. They tend to plow earnings back into the business or tidy up their balance sheets instead, both of which Ceragon's doing. And with a debt-to-capital ratio of just 6.69% that it's working on reducing, it's a good sign that they’re keeping things financially stable One last note, and I’ll admit it’s a personal bias: as someone who’s spent quite a bit of time traveling across Israel over the past thirty years, I can’t help but feel that Ceragon’s roots in this tech powerhouse deserve a mention. Israel’s reputation as a hub for innovation adds a layer of credibility to the company’s long-term potential. Yes, the current geopolitical risks are part of the deal, but in many ways, it’s precisely those challenges that seem to fuel the relentless ingenuity of this small yet astonishingly resourceful nation. Margin Pressure Persists Now for the challenges: Ceragon hit a few hiccups this quarter, with its non-GAAP gross margin slipping (although minuscule) from 34.9% to 34.3%. Looking ahead, the gross margin boost expected in 2025 from new silicon products will likely be on the modest side, given the low initial production volumes. In the private network segment, bookings took a bit of a dip this quarter, thanks to seasonal quirks and longer sales cycles, even though demand itself stayed solid. Over in the public network space, things mirrored broader industry patterns, with Tier 1 service providers easing up on their ordering pace. Geographically, it wasn’t all smooth sailing either. Regions like Latin America, Africa, and parts of Asia-Pacific ran into extra challenges, mostly due to tough competition from Chinese vendors pushing aggressive pricing. The U.S. market brought its own set of headaches. Federal broadband subsidies, while theoretically helpful, have been hampered by inefficiencies in how they’re rolled out, and a dash of political uncertainty with the pending shift to a new administration hasn’t helped matters either. Together, these issues could put a damper on opportunities in broadband and defense. As for cracking the U.S. defense sector that I brought up earlier, that’s no picnic either, with its maze of clearance requirements and the sort of approval processes that seem designed to test one’s patience. This could potentially improve significantly, especially with Trump's plan for a DOGE (Department of Government Efficiency, led by Elon Musk and Vivek Ramaswamy) looking to drastically trim bloated, bureaucratic systems causing red tape that impedes business progress. On the other hand, as an Israeli-based company, this very same administration might put up roadblocks for non-American companies. Also, the quarter did get a little lift in profitability, thanks to a one-time $5.1 million debt settlement tucked away under G&A expenses, a helpful boost, but not one likely to make a repeat appearance. And finally here, while we saw some promising signs in Q4 bookings, I think it’s worth pointing out that Ceragon’s dependence on a few big customers in India underscores some pretty clear concentration risks. Final Takeaway  Based on the analysis, I’d call CRNT a “Buy” since the company has carved out a promising spot for itself, particularly in markets like India and North America, all while managing to boost revenue by 17.7%. As with all companies, there are hurdles, and in Ceragon's case, it's squeezed margins, a heavy reliance on a few key customers, and some geographic quirks. But with its bargain valuation, steady pipeline of innovations, and a firm foothold in the 5G world, it looks like a solid pick for the long haul.","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"1","news_tag":"analysis","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":1,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2485122754"}