Jun 10, 2022
The share price has been crashing despite stable cash dividends
It is unlikely the stock will recover in the foreseeable future
Comtech Telecommunications (NASDAQ:CMTL) announced a $0.10 cash dividend. This comes after results show a low EPS of $0.06. One year ago, the company had $0.26 EPS. Analysts have been expecting lower performance.
Comtech lost more than 21% of its value following the earnings release. That is despite announcing a dividend of $0.10. The dividend yield is at 3.25%. The company announced that this dividend would be the 48th consecutive quarterly payment. Keen investors would note that the dividend has been at the same level with no growth whatsoever. In fact, when compared to a longer duration, the cash dividends have declined.
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The company is projected to close with a per-share loss of $1. That news means that the stock can only edge lower. The only factors that probably would support the price are the price-to-book and price-to-sales ratios. At 0.66 and 0.56 respectively, these ratios indicate that the stock is trading below fair value. However, to unlock the value, a turnaround strategy is needed.
Comtech Telecommunications is bleeding uncontrollably
Source – TradingView
Technical analysis indicates that Comtech was already battered long before the results came out. The stock is already at a historic low with a price of $9.53 and declining. There is no indication that anything will stop the bleeding. Even worse, there is no hope that the stock could reverse the trend in the near future.
We recommend selling Comtech as the stock moves to the bottom. The company’s earnings are on the decline hence pulling down the price. Payment of regular dividends is not adequate to support the price.
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