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Brightpoint,
Inc. (CELL)
The
future of global communication and culture is without cords and
boundaries. Wireless technologies are changing the way we
live, work and play. Companies like
Apple, Motorola, Samsung, Sandisk, Lenovo, Plantronics and many more
are
creating products that influence everything we do as a society.
Brightpoint is
a necessary catalyst for their continued success and in turn reaps
serious
rewards from growth in the entire space.
Company
Description & Developments
Brightpoint has over 25,000 B2B customers in over 35
different countries. The aforementioned
companies are just a couple of Brightpoint’s
customer base. In 2010 alone, the company handled 99 million wireless
devices globally.
Brightpoint
has a business model that may be tough
for many to grasp without some research.
Essentially
they provide services to a company such
as Samsung (and many others) that include distribution channel
management,
procurement (of parts and materials), inventory management, repair
services (warranty
work, etc) and reverse logistics.
They
also load software onto devices after
manufacture and offer kitting and customized packaging, fulfillment and
product
customization to make the products you buy more attractive.
Think
of them as the outsourcer for just about everything
that a wireless company might need, even offering online “stores” for
specific
companies, such as the Windows phone online shop in the Middle East and
Africa
that they launched in October 2011.
Being
that the wireless segment is growing by leaps and bounds and that many
corporations are trying to save every penny in the process, a company
like Brightpoint becomes more and more invaluable.
Financial
Profile
Brightpoint is a small cap company that is trading at
about 12.5 times trailing earnings (P/E).
Looking forward, Zacks Consensus Estimates see Brightpoint’s P/E
dropping to 11, with no change in price from
these levels.
Brightpoint rose to a Zacks Rank 1-Strong Buy in the past
week.
Analysts
have not revised their earnings estimates recently
but we did see revisions up and down to current quarter, full year and
next year’s
estimates within the past 90 days.
Last
quarter CELL reported sales growth of 50.5% year over year and 8% over
the
previous quarter with total sales of 3.6 billion in FY2010.
Brightpoint
is expected to earn $.91 in FY2011 according to the Zacks Consensus
Estimate.
Earnings
Estimates
Expectations
are for Brightpoint to make 30
cents this quarter when they report on February 1st. Being
that Brightpoint guided in-line with estimates, I would be less
concerned of a surprise. Of the four
analysts that cover Brightpoint, the
consensus is for the company to grow earnings by 19.08% in FY2011 and
14.09% in
FY2012.
Brightpoint
surprised analysts to the upside by 23.81%
last quarter, with the average earnings surprise being a positive
17.53%. They reaffirmed their stable earnings
outlook
in October 2011 for FY2011, back then estimates were expecting
Brightpoint to
report EPS of $0.32 for fourth quarter and $1.01 for fiscal
2011.
Market
Performance & Technicals
Brightpoint
looks slightly different from most of our momentum stocks being that
the stock
was higher just a year ago, although we are fast approaching that
yearly high
of $13.11.
CELL
was recently looking overbought, but has since corrected and moved into
a more advantageous entry position for bulls. The stock remains in a
bullish channel (since August) and firmly above its 50 and 200 day
moving
averages of $10.17 and $9.36 respectively.
Brightpoint
has a slightly elevated beta of 1.63, but is
a lower dollar stock so it tends to look less volatile than it really
is.
Brightpoint
has outpaced the S&P 500 by almost 25% over
the past year and almost 9% over the past 3 months. The
recent move over the past 30 days put Brightpoint 14% over the index’s
performance.
All
in all, Brightpoint represents a solid,
diversified alternative in the wireless space.
Jared
A Levy is the Momentum Stock Strategist for Zacks.com. He is also the
Editor in
charge of the market-beating Zacks
Whisper Trader Service.
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