Audiocodes Ltd (NASDAQ: AUDC)

Sector: Technology Industry: Communication Equipment CIK: 0001086434
Market Cap 220.70 Mn
P/B 1.29
P/E 24.65
P/S 0.90
ROIC (Qtr) 4.73
Div Yield % 4.97
Rev 1y % (Qtr) 1.71
Total Debt (Qtr) 37.98 Mn
Debt/Equity (Qtr) 0.22

About

AudioCodes Ltd., a company with the ticker symbol AUDC, operates in the enterprise, contact center, and service provider markets, providing advanced voice and data solutions. The company was established in 1992 and has since been dedicated to accelerating the voice-enablement of Microsoft Teams. AudioCodes' primary business activities encompass the development, marketing, and sale of products and services that enable businesses to communicate effectively and efficiently, whether through voice, video, or data. These activities are divided into several...

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Price action

Investment thesis

Bull case

  • Strong operating cash flow of 29.36M provides robust 0.77x coverage of total debt 37.98M, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 45.28M provide 6.82x coverage of short-term debt 6.63M, demonstrating strong liquidity position and minimal refinancing risk.
  • Strong tangible asset base of 285.58M provides 7.52x coverage of total debt 37.98M, indicating robust asset backing and low credit risk.
  • Operating cash flow of 29.36M provides exceptional 63.69x coverage of interest expenses 461000, showing strong debt service capability.
  • Robust free cash flow of 22.89M exceeds capital expenditure of 6.47M by 3.54x, indicating strong organic growth funding capability.

Bear case

  • Operating cash flow of 29.36M barely covers its investment activities of (1.55M), with a coverage ratio of -18.99, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 29.36M provides thin coverage of dividend payments of (10.93M) with a -2.69 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Investment activities of (1.55M) provide weak support for R&D spending of 52.59M, which is -0.03x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Operating cash flow of 29.36M provides insufficient coverage of deferred revenue obligations of 58.76M, which is 0.50x, raising concerns about future service delivery capabilities.
  • High receivables of 98.46M relative to inventory of 22.03M (4.47 ratio) suggests aggressive credit terms or collection difficulties, potentially masking revenue quality issues.

Geographical Breakdown of Revenue (2024)

Segments Breakdown of Revenue (2024)

Peer comparison

Companies in the Communication Equipment
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 CSCO Cisco Systems, Inc. 425.48 Bn 43.28 8.76 28.09 Bn
2 MSI Motorola Solutions, Inc. 71.64 Bn 127.93 11.87 9.81 Bn
3 CIEN Ciena Corp 38.46 Bn 311.86 8.06 1.58 Bn
4 LITE Lumentum Holdings Inc. 38.36 Bn 152.48 18.22 3.32 Bn
5 UI Ubiquiti Inc. 37.65 Bn 42.36 12.67 0.11 Bn
6 HPE Hewlett Packard Enterprise Co 30.92 Bn 12.11 1.03 22.37 Bn
7 ASTS AST SpaceMobile, Inc. 27.86 Bn -91.70 1,503.54 0.72 Bn
8 ZBRA Zebra Technologies Corp 12.90 Bn 25.19 2.45 2.32 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.65 2.55
EV to Cash from Ops. EV/CFO 7.12 10.31
EV to Debt EV to Debt 5.51 31.95
EV to EBIT EV/EBIT 14.90 87.00
EV to EBITDA EV/EBITDA 11.45 10.88
EV to Free Cash Flow [EV/FCF] EV/FCF 9.14 62.78
EV to Market Cap EV to Market Cap 0.95 1.09
EV to Revenue EV/Rev 0.85 38.48
Price to Book Value [P/B] P/B 1.29 3.65
Price to Earnings [P/E] P/E 24.65 21.22
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.82 0.61
Dividend Payout Ratio % Div Payout % (Qtr) 122.60 -24.04
Dividend per Basic Share Div per Share (Qtr) 0.38 0.23
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 47.32 4.73
Interest Coverage Int. cover (Qtr) 30.45 -11.69
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 73.34 -57.98
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -22.92 465.23
Dividend Growth (1y) % Div 1y % (Qtr) 5.56 1.58
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -46.90 72.41
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -13.29 -8.57
EBIT Growth (1y) % EBIT 1y % (Qtr) -18.34 69.66
EBT Growth (1y) % EBT 1y % (Qtr) -10.06 -70.46
EPS Growth (1y) % EPS 1y % (Qtr) -39.22 8.86
FCF Growth (1y) % FCF 1y % (Qtr) 108.59 10.52
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 0.93 38.81
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.76 0.75
Cash Payout Ratio Cash Payout (Qtr) 0.31 0.03
Cash Ratio Cash Ratio (Qtr) 0.55 1.35
Current Ratio Curr Ratio (Qtr) 2.21 2.84
Debt to Equity Ratio Debt/Equity (Qtr) 0.22 0.47
Interest Cover Ratio Int Coverage (Qtr) 30.45 -11.69
Times Interest Earned Times Interest Earned (Qtr) 30.45 -11.69
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 7.40 -41.21
EBIT Margin % EBIT Margin % (Qtr) 5.72 -52.62
EBT Margin % EBT Margin % (Qtr) 5.53 -59.46
Gross Margin % Gross Margin % (Qtr) 65.00 38.49
Net Profit Margin % Net Margin % (Qtr) 3.60 -60.82