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CommScope Holding (COMM)
NASDAQ:COMM
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CommScope Holding
(NASDAQ:COMM)
51Neutral
Positive Factors
Debt Refinancing
Strategic debt refinancing allows breathing room for the company in combination with expectations of double-digit growth in each of its three revenue segments of CCS, ANS, and core NICS.
Earnings
4Q results were better than expected, and management’s indications of 20% FY25 revenue growth and EBITDA of $1.025bn were well above expectations.
Negative Factors
Debt Level
Limited upside potential to the equity is seen given the high debt level, limited FCF generation, and valuation considerations.
Interest Burden
Equity upside potential is constrained by high interest burden and minimal cash flow generation in 2025 due to $600mn+ in debt interest and $200mn in operating costs.
Valuation
High leverage burdens the valuation, with a 2025 EV/EBITDA of 11.5x above the historic range of 9-10x.
CommScope Holding (COMM) vs. S&P 500 (SPY)
Market Cap
$1.16B
Dividend YieldN/A
Average Volume (3M)5.78M
Price to Earnings (P/E)―
Beta (1Y)0.70
Revenue Growth-28.32%
EPS Growth73.59%
CountryUS
Employees20,000
SectorTechnology
Sector Strength44
IndustryCommunication Equipment
Share Statistics
EPS (TTM)-1.89
Shares Outstanding216,560,560
10 Day Avg. Volume5,249,162
30 Day Avg. Volume5,775,473
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.29
Price to Cash Flow (P/CF)1.10
P/FCF Ratio0.70
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$5.46Price Target Upside2.82% Upside
Rating ConsensusModerate Sell
Number of Analyst Covering6
CommScope Holding Business Overview & Revenue Model
Company DescriptionCommScope Holding Company, Inc. provides infrastructure solutions for communications and entertainment networks. It operates through four segments: Broadband Networks (Broadband), Outdoor Wireless Networks (OWN), Venue and Campus Networks (VCN), and Home Networks (Home). The Broadband segment provides converged cable access platforms, passive optical networking products, video systems, access technologies, fiber and coaxial cables, fiber and copper connectivity products, and hardened closures to the telco and cable provider broadband market. The OWN segment provides base station antennas, radio frequency filters, tower connectivity, microwave antennas, metro cell products, cabinets, steel towers, accessories, Spectrum Access System, and Comsearch products to the macro and metro cell markets. The VCN segment offers Wi-Fi and switching, distributed antenna systems, licensed and unlicensed small cells, enterprise fiber, and copper infrastructures for campuses, venues, data centers, and buildings. The Home segment provides devices and related software, and management solutions that offer residential connectivity and services to subscribers, such as digital subscriber lines, cable modems, and telephony and data gateways; and set top boxes and software that support cable, satellite, and Internet protocol television content delivery, which include digital video recorders, high definition set top boxes, and hybrid set top devices. It offers its products and services through specialized resellers and distributors, satellite video distributors, and system integrators, as well as directly to customers in the United States, Europe, the Middle East, Africa, the Asia Pacific, the Caribbean, Latin America, and Canada. The company was formerly known as Cedar I Holding Company, Inc. and changed its name to CommScope Holding Company, Inc. in January 2011. CommScope Holding Company, Inc. was founded in 1976 and is headquartered in Hickory, North Carolina.
How the Company Makes MoneyCommScope generates revenue through the sale of its comprehensive portfolio of network infrastructure products and solutions. The company's revenue streams are primarily derived from its four business segments: Broadband Networks, Home Networks, Outdoor Wireless Networks, and Venue and Campus Networks. It earns money by providing products such as fiber optic cables, copper cables, antennas, and network management software. CommScope also benefits from strategic partnerships with telecom and broadband service providers, enterprises, and government entities, which contribute to its sales. The company's ability to innovate and adapt to emerging technology trends, such as 5G, further enhances its revenue potential.
CommScope Holding Financial Statement Overview
Summary
CommScope faces significant financial challenges with declining revenues and a concerning balance sheet. The income statement highlights operational inefficiencies, while the balance sheet reflects high leverage and financial instability due to negative equity. Cash flow remains positive, which is a positive sign amidst financial struggles.Income Statement
CommScope Holding has shown a declining revenue trend over the years with a significant drop in TTM (Trailing-Twelve-Months) revenue compared to the previous year. The gross profit margin for TTM stands at 37.5%, but the net profit margin is negative due to continued net losses. EBIT margin is 6.1%, showing some operational efficiency, but EBITDA is negative, indicating potential operational cash flow issues. The company needs to improve its revenue growth and manage costs more effectively.45
Neutral
Balance Sheet
The balance sheet shows a concerning financial structure with negative stockholders' equity of -$2.23 billion as of TTM. The company has a high debt-to-equity ratio due to its negative equity, posing financial risk. Return on equity is not meaningful due to negative net income and equity. The equity ratio is also negative, indicating insolvency issues. Overall, the balance sheet reflects high leverage and financial instability.30
Negative
Cash Flow
Despite negative net income, CommScope Holding has managed to maintain positive operating cash flow. The free cash flow has seen a slight increase from the previous year, reflecting some operational cash generation capability. However, the free cash flow to net income ratio is challenging to interpret due to negative net income. The company needs to focus on improving cash flow from operations to support its capital structure.55
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 4.21B | 5.79B | 9.23B | 8.59B | 8.44B | Gross Profit |
| 1.58B | 2.15B | 2.80B | 2.68B | 2.75B | EBIT |
| 256.50M | -112.90M | 471.40M | 132.30M | 218.40M | EBITDA |
| 648.10M | 519.10M | 85.30M | 813.00M | 746.60M | Net Income Common Stockholders |
| -380.70M | -1.45B | -1.29B | -462.60M | -573.40M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 564.90M | 543.80M | 398.10M | 360.30M | 521.90M | Total Assets |
| 8.75B | 9.37B | 11.69B | 13.26B | 13.58B | Total Debt |
| 9.24B | 9.32B | 9.50B | 9.51B | 9.52B | Net Debt |
| 8.67B | 8.77B | 9.10B | 9.15B | 9.00B | Total Liabilities |
| 10.98B | 11.18B | 12.13B | 12.36B | 12.18B | Stockholders Equity |
| -2.23B | -1.81B | -445.70M | 899.50M | 1.40B |
| Cash Flow | Free Cash Flow | |||
| 247.80M | 236.60M | 88.70M | -9.10M | 315.00M | Operating Cash Flow |
| 273.10M | 289.90M | 190.00M | 122.30M | 436.20M | Investing Cash Flow |
| -57.20M | 38.30M | -82.10M | -136.80M | -120.20M | Financing Cash Flow |
| -83.00M | -181.70M | -65.00M | -139.50M | -383.80M |
CommScope Holding Technical Analysis
Negative
5.31
Price Trends
5.33
Negative
5.29
Positive
4.56
Positive
Market Momentum
0.04
Negative
47.65
Neutral
39.51
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For COMM, the sentiment is Negative. The current price of 5.31 is below the 20-day moving average (MA) of 5.39, below the 50-day MA of 5.33, and above the 200-day MA of 4.56, indicating a neutral trend. The MACD of 0.04 indicates Negative momentum. The RSI at 47.65 is Neutral, neither overbought nor oversold. The STOCH value of 39.51 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for COMM.
CommScope Holding Risk Analysis
CommScope Holding disclosed 38 risk factors in its most recent earnings report. CommScope Holding reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
CommScope Holding Peers Comparison
Overall Rating
UnderperformOutperform
Sector (58)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $98.29B | 34.81 | 33.14% | ― | 19.50% | 34.64% | |
74 Outperform | $242.12B | 26.67 | 20.02% | 2.63% | -5.34% | -30.57% | |
66 Neutral | $8.75B | 111.95 | 2.76% | ― | -7.29% | -64.31% | |
58 Neutral | $21.03B | 10.58 | -16.29% | 2.47% | 4.38% | -23.63% | |
51 Neutral | $1.16B | ― | 17.08% | ― | -28.32% | 73.59% | |
45 Neutral | $710.75M | ― | -123.20% | ― | -19.70% | -70.40% | |
44 Neutral | $1.85B | ― | -152.77% | ― | -24.49% | -250.61% |
* Technology Sector Average
Performance Comparison
COMM
CommScope Holding
5.31
4.08
331.71%
ADTN
Adtran
8.72
3.50
67.05%
CIEN
Ciena
60.43
11.83
24.34%
CSCO
Cisco Systems
61.71
13.86
28.97%
EXTR
Extreme Networks
13.23
2.04
18.23%
ANET
Arista Networks
77.48
4.77
6.56%
CommScope Holding Earnings Call Summary
Earnings Call Date: Feb 26, 2025 | % Change Since: 8.59% | Next Earnings Date: May 1, 2025
Earnings Call Sentiment Positive
The earnings call presented a positive outlook with significant growth in key areas such as data centers and enterprise fiber, along with successful debt reduction and refined projections for 2025. However, these positives are tempered by annual revenue decline and challenges in the ANS segment.Highlights
Strong Fourth Quarter Performance
CommScope delivered core net sales of $1.17 billion, a year-over-year increase of 27%, and core adjusted EBITDA of $240 million, a year-over-year increase of 69%. Core adjusted EBITDA as a percentage of revenues was 20.6%, one of the highest since the ARRIS acquisition.
Data Center and Enterprise Fiber Business Growth
The enterprise fiber business drove revenues of $623 million in 2024, a 73% increase year-over-year. In the fourth quarter alone, the enterprise business had $202 million of revenue, an increase of 96% over fourth quarter 2023.
Debt Refinancing and Reduction
CommScope refinanced a portion of its debt and paid down approximately $2 billion of debt, improving its financial position and allowing a focus on business growth and deleveraging.
Projected 2025 Growth
CommScope is projecting 2025 core adjusted EBITDA in the $1.0 billion to $1.05 billion range, with substantial growth expected in all business segments.
Rising Demand in Core NICS
Revenue for Core NICS was up 13% in the fourth quarter compared to the prior year, with adjusted EBITDA up 285%, driven by normalized channel inventory and new product initiatives.
Lowlights
Annual Revenue Decline
CommScope's annual net sales decreased by 8% from the prior year, with core adjusted EBITDA remaining flat, primarily due to a delayed upgrade cycle in ANS.
Weak Performance in ANS
2024 was a transitional year for ANS, with historically weak performance due to larger-than-expected customer inventory and delayed upgrade cycles.
One-time Inventory Charge
The ANS business incurred a one-time inventory charge of $18 million, impacting the fourth quarter's adjusted EBITDA.
Company Guidance
During the call, CommScope provided guidance for 2025, projecting core adjusted EBITDA in the range of $1.0 billion to $1.05 billion, a significant increase from the $756 million reported in 2024. The company anticipates substantial growth across all business segments, driven by strong demand in its CCS and core NICS businesses. CommScope ended 2024 with core net sales of $4.21 billion, a decrease of 8% year-over-year, and fourth-quarter core net sales of $1.17 billion, a 27% increase from the previous year. The fourth-quarter core adjusted EBITDA was $240 million, reflecting a 69% increase year-over-year, with an adjusted EBITDA margin of 20.6%. Additionally, the company highlighted a positive debt position, having refinanced a portion of its debt and repaid approximately $2 billion with proceeds from selling its OWN and DAS businesses. CommScope expects to achieve a total debt-to-adjusted EBITDA ratio below 6x by the end of 2026.CommScope Holding Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
CommScope Appoints New Senior VP for Financial Leadership
Positive
Mar 31, 2025
On March 28, 2025, CommScope Holding Company announced the appointment of Charles A. Gilstrap as Senior Vice President, Treasury, Tax & Chief Accounting Officer, effective April 1, 2025. This appointment marks a strategic move in the company’s leadership, with Mr. Gilstrap replacing Jennifer L. Crawford, who will return to her role as Segment CFO for Connectivity & Cable Solutions. The announcement also detailed Mr. Gilstrap’s compensation package and severance protection agreement, indicating a robust support structure for his new role. These changes are expected to strengthen CommScope’s financial management and align with its long-term strategic goals.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.