Vecima Networks (VCM) AI Stock Analysis

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Vecima Networks

(TSX:VCM)

Rating:68Neutral

Price Target:

C$11.00

▲(7.21%Upside)

Vecima Networks' overall score is bolstered by strong financial performance and positive corporate events, indicating strategic growth initiatives. However, the high P/E ratio and technical indicators suggest some caution is warranted. The stock's valuation and technical analysis are less favorable, slightly tempering the overall score.

Vecima Networks (VCM) vs. iShares MSCI Canada ETF (EWC)

Market Cap

C$252.63M

Dividend Yield2.12%

Average Volume (3M)2.74K

Price to Earnings (P/E)67.5

Beta (1Y)0.23

Revenue Growth9.13%

EPS Growth-77.24%

CountryCA

Employees590

SectorTechnology

Sector Strength83

IndustryCommunication Equipment

Share Statistics

EPS (TTM)0.02

Shares Outstanding24,314,594

10 Day Avg. Volume3,709

30 Day Avg. Volume2,740

Financial Highlights & Ratios

PEG Ratio-0.52

Price to Book (P/B)1.07

Price to Sales (P/S)0.00

P/FCF Ratio16.16

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

C$20.00

Price Target Upside94.93% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering0

Vecima Networks Business Overview & Revenue Model

Company DescriptionVecima Networks (VCM) is a technology company that specializes in providing advanced broadband access, content delivery, and telematics solutions. The company operates in sectors including telecommunications, media, and transportation, offering products and services such as video delivery software, broadband access equipment, and fleet management solutions. Vecima's core products cater to the needs of network service providers and enterprises, enabling them to deliver high-quality video, internet, and telematics services to their customers.

How the Company Makes MoneyVecima Networks generates revenue primarily through the sale of its technology solutions and services. The company earns money by providing broadband access products, which include hardware and software solutions for cable and telecommunications providers to enhance their network capabilities. Additionally, Vecima's content delivery and storage solutions are a significant revenue stream, serving media companies and service providers that require efficient video and data distribution. The telematics division contributes to earnings by offering fleet and asset management solutions to businesses, improving operational efficiencies. Vecima also benefits from strategic partnerships and long-term contracts with major network operators and enterprises, which provide a steady income stream through recurring sales and service agreements.

Vecima Networks Earnings Call Summary

Earnings Call Date:May 15, 2025

(Q1-2025)

% Change Since: -3.66%|

Next Earnings Date:Sep 18, 2025

Earnings Call Sentiment Neutral

The earnings call highlighted significant growth in sales and strategic acquisitions, particularly in the Video and Broadband Solutions segment, which drove a substantial increase in operating income and cash flow. However, challenges in the Content Delivery and Storage segment and a shift in product mix affecting gross margins were notable lowlights. The overall sentiment is cautiously optimistic, with expectations of a stronger second half of the year.

Q1-2025 Updates

Positive Updates

Record-Breaking Sales Growth

Sales in Q1 of $81.9 million represented the second highest quarterly sales in Vecima's history, up 33% year-over-year.

Entra DAA Portfolio Success

Entra sales have grown over 13-fold from $5.2 million four years ago to $68.3 million this quarter.

VBS Segment Revenue Growth

The Video and Broadband Solutions segment contributed sales of $72.9 million, a 65% year-over-year increase.

Telematics Segment Growth

Telematics segment sales increased 5% year-over-year, with over 72,000 assets monitored for over 200 customers.

Improved Operating Income

Operating income increased 69% year-over-year to $4.5 million, reflecting higher VBS sales.

Strong Cash Flow

Cash flow provided by operations increased to $24.4 million from $8.4 million year-over-year.

Strategic Acquisition of Falcon V Systems

Acquisition of Falcon V Systems brought in new technologies like Principal Core and Test Suite Solution, enhancing Vecima’s product offerings.

Negative Updates

Content Delivery and Storage Segment Decline

CDS segment sales decreased 54% year-over-year and 35% quarter-over-quarter due to delays in customer IPTV deployment projects.

Lower Gross Margins

Gross margin decreased to 41.7% from 48.8% last year, primarily due to product mix changes and reduced high-margin CDS sales.

Commercial Video Sales Decrease

Commercial video sales decreased 15% year-over-year and 23% quarter-over-quarter as customers transition to next-gen technologies.

BEAD Program Delays

Slower than expected start of the USD 42.5 billion BEAD program, impacting potential revenue from fiber access products.

Company Guidance

In the earnings call for Vecima Networks' Q1 fiscal year 2025, the company reported significant growth metrics and strategic developments. Revenue for the quarter reached $81.9 million, marking the second-highest quarterly revenue in the company's history and reflecting a 33% year-over-year increase. The Video and Broadband Solutions (VBS) segment was a key contributor, with sales growing 65% year-over-year to $72.9 million, driven by the Entra Distributed Access Architecture (DAA) sales, which rose 76% year-over-year. Gross profit increased by 14% to $34.2 million, although the gross margin declined to 41.7% from 48.8% due to product mix shifts. Operating income surged 69% to $4.5 million, and net income improved to $2.1 million, or $0.09 per share, compared to $1.7 million or $0.07 per share the previous year. Adjusted EBITDA saw a 43% increase to $11.6 million. The company also highlighted the acquisition of Falcon V Systems, which is expected to enhance its network convergence capabilities and provide new revenue opportunities. Despite some delays in projects within the Content Delivery and Storage (CDS) segment, Vecima anticipates a stronger second half of the fiscal year, driven by continued DAA deployments and new product introductions, including the vCMTS platform and developments in DOCSIS 4.0 technology.

Vecima Networks Financial Statement Overview

Summary

Overall, Vecima Networks demonstrates robust financial health with a strong revenue growth trajectory and operational efficiency. While the company maintains a stable balance sheet with conservative leverage, its cash flow management has improved significantly. The company is well-positioned to capitalize on future opportunities, although returns on equity could be enhanced.

Income Statement

Positive

Vecima Networks shows a strong revenue growth trajectory with a notable increase from the previous year. The TTM Gross Profit Margin is healthy at 41.8%, and the Net Profit Margin stands at 2.6%, indicating profitability despite competitive pressures in the hardware industry. The company also maintains a decent EBITDA Margin of 13.2%, reflecting operational efficiency.

Balance Sheet

Positive

The balance sheet reflects a solid equity position with an Equity Ratio of 63.6%, which signifies financial stability. The Debt-to-Equity Ratio is manageable at 0.24, indicating conservative leverage. However, the Return on Equity (ROE) is relatively low at 3.6%, suggesting limited returns on equity capital.

Cash Flow

Positive

Vecima Networks has shown an improvement in Free Cash Flow, with positive Free Cash Flow in the TTM period. However, the Operating Cash Flow to Net Income Ratio is 5.67, indicating strong cash generation relative to net earnings. The Free Cash Flow to Net Income Ratio is 1.85, reflecting efficient cash management.

TTM	Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Breakdown
Income Statement		Total Revenue
320.74M	291.05M	303.44M	186.81M	124.18M	96.42M
	Gross Profit
134.25M	136.66M	141.97M	89.96M	56.64M	52.30M
	EBIT
24.71M	29.59M	33.29M	9.44M	-1.17M	223.00K
	EBITDA
42.23M	49.81M	55.89M	29.05M	10.77M	18.98M
	Net Income Common Stockholders
8.32M	19.39M	27.21M	8.69M	-331.00K	1.81M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
2.36M	2.14M	2.28M	12.90M	28.91M	34.52M
	Total Assets
365.93M	387.82M	331.69M	262.61M	214.73M	210.30M
	Total Debt
54.74M	69.56M	36.90M	16.90M	5.72M	6.31M
	Net Debt
52.38M	67.43M	34.62M	4.00M	-23.18M	-11.04M
	Total Liabilities
133.27M	152.86M	114.03M	82.88M	39.81M	30.54M
	Stockholders Equity
232.66M	234.96M	217.65M	179.73M	174.92M	179.76M
Cash Flow		Free Cash Flow
15.35M	-27.34M	-37.36M	-19.94M	1.44M	-3.53M
	Operating Cash Flow
47.13M	2.71M	-11.01M	3.33M	20.05M	9.83M
	Investing Cash Flow
-31.80M	-26.19M	-26.35M	-23.27M	-5.00M	-5.96M
	Financing Cash Flow
-14.63M	23.62M	26.84M	4.99M	-4.61M	-5.97M

Vecima Networks Technical Analysis

Technical Analysis Sentiment

Neutral

Last Price10.26

Price Trends

50DMA

9.85

Positive

100DMA

10.92

Negative

200DMA

14.73

Negative

Market Momentum

MACD

0.09

Negative

RSI

52.76

Neutral

STOCH

75.13

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:VCM, the sentiment is Neutral. The current price of 10.26 is above the 20-day moving average (MA) of 10.15, above the 50-day MA of 9.85, and below the 200-day MA of 14.73, indicating a neutral trend. The MACD of 0.09 indicates Negative momentum. The RSI at 52.76 is Neutral, neither overbought nor oversold. The STOCH value of 75.13 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for TSE:VCM.

Vecima Networks Peers Comparison

Overall Rating

UnderperformOutperform

Sector (62)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ET	79 Outperform	C$916.58M	15.25	22.71%	6.53%	-4.64%	-19.57%
VCM	68 Neutral	C$252.63M	67.46	1.61%	2.12%	9.13%	-77.24%
Sector *	62 Neutral	$11.75B	10.58	-7.10%	2.91%	7.47%	-7.95%
QTRH	49 Neutral	$162.71M	―	-11.53%	―	4.23%	47.22%
TSAT	49 Neutral	$321.46M	8.35	-12.49%	―	-20.40%	-161.60%
CMI	46 Neutral	C$45.21M	24.42	-4.55%	4.67%	-41.82%	-149.06%
BYL	41 Neutral	C$35.62M	―	275.12%	―	―	―

* Technology Sector Average

Performance Comparison

TSE:VCM

Vecima Networks

10.26

-10.40

-50.34%

TSE:QTRH

Quarterhill

1.39

-0.38

-21.47%

TSE:CMI

C-Com Satellite Systems

1.03

-0.17

-14.17%

TSE:ET

Evertz Technologies

12.06

-1.82

-13.11%

TSE:BYL

Baylin Tech

0.22

-0.06

-21.43%

TSE:TSAT

Telesat Corp

22.00

9.02

69.49%

Vecima Networks Corporate Events

Product-Related AnnouncementsBusiness Operations and StrategyFinancial Disclosures

Vecima Networks Strengthens Market Position with Strategic Wins and Product Advancements

Positive

May 15, 2025

Vecima Networks reported a revenue of $64.0 million for Q3 Fiscal 2025, with a gross margin of 47.7% and an adjusted EBITDA of $9.4 million, showing improvement despite industry timing challenges. The company secured a multi-year agreement with Cox Communications for its Entra vCMTS solution, positioning itself as a key player in the cloud-based vCMTS market, which is expected to grow significantly. Vecima’s strategic advancements and product deployments, such as the EN9000 and EN8400 nodes, are set to drive future growth as operators upgrade their systems.

The most recent analyst rating on (TSE:VCM) stock is a Buy with a C$27.00 price target. To see the full list of analyst forecasts on Vecima Networks stock, see the TSE:VCM Stock Forecast page.

Dividends

Vecima Networks Announces Quarterly Dividend

Positive

May 14, 2025

Vecima Networks Inc. has announced a quarterly dividend of $0.055 per common share, payable on June 23, 2025, to shareholders recorded by May 30, 2025. This decision aligns with the company’s existing dividend policy and underscores its commitment to delivering value to shareholders. The dividend is designated as an ‘eligible dividend’ for Canadian tax purposes, with future dividends subject to board approval.

The most recent analyst rating on (TSE:VCM) stock is a Buy with a C$27.00 price target. To see the full list of analyst forecasts on Vecima Networks stock, see the TSE:VCM Stock Forecast page.

Financial Disclosures

Vecima Networks to Discuss Q3 Fiscal 2025 Results in Upcoming Earnings Call

Neutral

May 1, 2025

Vecima Networks Inc. has announced a conference call and live audio webcast scheduled for May 15, 2025, to discuss its financial and operational results for the third quarter of fiscal 2025. The announcement highlights Vecima’s commitment to transparency and engagement with analysts and institutional investors, potentially impacting its market positioning and stakeholder relations.

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.