TransAct Technologies (NASDAQ:TACT), which develops and sells software-driven technology and printing solutions for banking, restaurant, casino, and gaming, had impressed investors with its growth strategies and cash returns. Its stock price soared more than 44% in the last six months before the dip of 13% today.
The latest selloff in TACT shares was due to lower than expected growth in revenue and earnings. The company missed analysts’ consensus revenue and earnings estimate for the fourth quarter by $1.45 million and $0.03 per share.
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Lower than Expected Financial Numbers Impacted the Stock Price
Its revenue of $13.2 million in Q4 FY2017 declined 3% from the year-ago period, mainly due to lower sales from restaurants – which fell to $1.4 million in the fourth quarter from $1.7 million in the past year period.
On the positive side, TransAct posted a record gross margin of 50.2% in Q4, compared to gross margin of 44.2% in the 2016 fourth quarter. The growth in gross margin was the outcome of a favorable sales mix including growing sales of AccuDate terminal consumables and strong lottery spare parts sales.
However, the company’s strategy of expanding its sales growth continues to impact its operating expenses. Its fourth quarter operating expenses jumped to $5.1 million from $4.1 million in the same period last year. Thus, TransAct Technologies posted a loss of $0.06 per share, relative to earnings of $0.18 per share in the year-ago quarter.
Share Buybacks and Cash Dividends Could Support the Stock Price
The company’s management has strong confidence in their future fundamentals and cash generation potential. TransAct recently announced a share buyback program of $5.0 million of its outstanding shares of common stock. Share buybacks always have a positive impact on the company’s earnings, dividends, and share price. Besides from buyback, the company also announced a quarterly dividend of $0.09 per share, yielding above 2.5%. Its dividends appear safe; the dividend payments accounts of only $0.7 million compared to $5.5 million of cash and cash equivalents and no debt.
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