Audiocodes Ltd (NASDAQ: AUDC)

Sector: Technology Industry: Communication Equipment CIK: 0001086434
Market Cap 251.51 Mn
P/B 1.45
P/E 18.19
P/S 1.03
ROIC (Qtr) 4.37
Div Yield % 4.35
Rev 1y % (Qtr) 2.16
Total Debt (Qtr) 37.40 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 40.55M provides robust 1.08x coverage of total debt 37.40M, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 48.92M provide 7.65x coverage of short-term debt 6.39M, demonstrating strong liquidity position and minimal refinancing risk.
  • Strong tangible asset base of 294.15M provides 7.87x coverage of total debt 37.40M, indicating robust asset backing and low credit risk.
  • Operating cash flow of 40.55M provides exceptional 30.86x coverage of interest expenses 1.31M, showing strong debt service capability.
  • Robust free cash flow of 32.20M exceeds capital expenditure of 8.34M by 3.86x, indicating strong organic growth funding capability.

Bear case

  • Operating cash flow of 40.55M provides thin coverage of dividend payments of (10.93M) with a -3.71 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Investment activities of 25.87M provide weak support for R&D spending of 51.43M, which is 0.50x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Operating cash flow of 40.55M provides insufficient coverage of deferred revenue obligations of 64.81M, which is 0.63x, raising concerns about future service delivery capabilities.
  • High receivables of 101.62M relative to inventory of 24.10M (4.22 ratio) suggests aggressive credit terms or collection difficulties, potentially masking revenue quality issues.
  • Operating cash flow of 40.55M provides minimal -55.17x coverage of tax expenses of (735000), suggesting potential tax planning inefficiencies or unsustainable tax positions.

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. 306.02 Bn 29.63 5.30 28.09 Bn
2 MSI Motorola Solutions, Inc. 63.92 Bn 30.21 5.65 9.81 Bn
3 HPE Hewlett Packard Enterprise Co 35.43 Bn -600.50 1.03 22.37 Bn
4 UI Ubiquiti Inc. 33.47 Bn 42.27 12.14 0.17 Bn
5 CIEN Ciena Corp 33.16 Bn 268.82 6.95 1.58 Bn
6 LITE Lumentum Holdings Inc. 25.28 Bn 224.75 13.73 3.28 Bn
7 ASTS AST SpaceMobile, Inc. 19.88 Bn -65.43 1,072.82 0.72 Bn
8 ZBRA Zebra Technologies Corp 12.46 Bn 24.33 2.37 2.32 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.68 2.22
EV to Cash from Ops. EV/CFO 5.58 10.78
EV to Debt EV to Debt 6.05 25.00
EV to EBIT EV/EBIT 15.70 32.18
EV to EBITDA EV/EBITDA 12.16 10.60
EV to Free Cash Flow [EV/FCF] EV/FCF 7.02 -3.32
EV to Market Cap EV to Market Cap 0.90 1.17
EV to Revenue EV/Rev 0.92 27.87
Price to Book Value [P/B] P/B 1.45 5.35
Price to Earnings [P/E] P/E 18.19 2.67
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 1.26 0.91
Dividend Payout Ratio % Div Payout % (Qtr) 79.20 -25.01
Dividend per Basic Share Div per Share (Qtr) 0.38 0.22
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 33.25 4.46
Interest Coverage Int. cover (Qtr) 10.97 -12.93
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 61.08 -73.93
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 108.00 463.06
Dividend Growth (1y) % Div 1y % (Qtr) 5.56 1.39
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 12.94 204.95
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -21.64 -1.04
EBIT Growth (1y) % EBIT 1y % (Qtr) -29.10 238.24
EBT Growth (1y) % EBT 1y % (Qtr) -28.79 173.82
EPS Growth (1y) % EPS 1y % (Qtr) 20.00 8.68
FCF Growth (1y) % FCF 1y % (Qtr) 313.47 20.80
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -0.36 41.66
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.74 0.76
Cash Payout Ratio Cash Payout (Qtr) 0.22 0.03
Cash Ratio Cash Ratio (Qtr) 0.55 1.20
Current Ratio Curr Ratio (Qtr) 2.09 2.69
Debt to Equity Ratio Debt/Equity (Qtr) 0.22 0.43
Interest Cover Ratio Int Coverage (Qtr) 10.96 -12.93
Times Interest Earned Times Interest Earned (Qtr) 10.96 -12.93
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 7.60 -40.66
EBIT Margin % EBIT Margin % (Qtr) 5.89 -52.32
EBT Margin % EBT Margin % (Qtr) 5.35 -59.46
Gross Margin % Gross Margin % (Qtr) 65.10 39.35
Net Profit Margin % Net Margin % (Qtr) 5.70 -60.72