SeaChange International (NASDAQ:SEAC) is a small cap software application company. Its innovative products and strong financial numbers are impressing investors over the last couple of months. In the latest quarter, the company has substantially beaten revenue and earnings estimates by $3.8 million and $0.08 per share, respectively. Moreover, the company has also raised its full-year earnings outlook after a strong performance in the third quarter 2017.
Its stock trading volume increased 10 times compared to normal daily volume after reporting solid financial results for the latest quarter. SeaChange stock price also soared more than 34% in the last three months, up 43% in the last twelve months.
Despite a strong share price appreciation, SeaChange’s share price looks undervalued based on its valuations and financial numbers. The company’s stock is currently trading around 2 times to book ratio and 1.6 times to sales ratio, compared to the industry average of 7.3 and 6.1 times, respectively.
In the third quarter, its revenue increased 17% to $23.4 million from Q3 of 2016. On the other hand, it has also successfully turned losses into profits in the latest quarter. In Q3, its income from operations was standing around $0.9M, relative to the loss from operations of $8.4M.
The strong enlargement in its financial numbers was due to the growth of existing and new customer’s cloud-based deployments and IP video.
Peter Faubert, Chief Financial Officer, SeaChange, said, “SeaChange’s financial performance in the quarter represents excellent progress in reaching our year-end goals more quickly. Our continued discipline in controlling operating expenses, and the sequential improvement in our GAAP and non-GAAP gross profit margin, demonstrate that SeaChange has successfully turned around its operations.
The company has raised its outlook for the following quarter. It now expects revenue in the range of $24M for Q4 2017, compared to the consensus estimate for $22.3M. Moreover, the company has also boosted revenue outlook for the full-year to $81M, when analysts have the consensus estimate for $80.3M. Overall, SeaChange looks like a perfect stock for growth investors.
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