Evertz is a global technology company serving customers worldwide. It manufactures broadcast equipment and solutions that deliver content to television sets, on-demand services, WebTV, IPTV, and mobile devices.
Evertz is one of the leaders in the broadcast industry designing and marketing video and audio infrastructure solutions.
Evertz has a global presence in Canada, the U.S., the UK, Germany, UAE, India, Hong Kong, China, Singapore, and Australia. The company markets and sells its products and services through both direct and indirect sales strategies.
Evertz derives revenue primarily from two main geographic regions: United States/Canada (~60%-70% of sales) and International (balance ~20%-30%). The company operates as a single reporting segment, the television broadcast equipment market.
- Opportunity Score: 39
- Ticker: TSE:ET
- Sector: Technology
- Industry: Communication Equipment
- Market Cap: 1.15B
- P/E: 27.81
- Dividend Yield: 4.74%
- Payout Ratio (TTM): 98.84%
- Canadian Dividend Aristocrat: NO
- Chowder Score: Members Only
- Revenue Growth: Members Only
- Dividend Growth: Members Only
- Dividend Growth Fit: 1/10
- Dividend Income Fit: 4/10
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Revenue Growth & Market Exposure
Evertz delivers innovative solutions in both the hardware and software industries. The company generates revenue principally from the sale of software, equipment, and technology solutions.
Evertz is known for delivering complete end-to-end broadcast solutions. It has a presence across all aspects of broadcast production including content creation, distribution, and delivery. Its products and solutions can be found in major broadcast facilities on every continent.
Evertz’s customer base includes telcos, satellite, cable TV, and IPTV providers. The company’s solutions are purchased by content creators, broadcasters, specialty channels, and television service providers. It covers many of the large telecoms.
Customers rely on Evertz’s products for efficient signal routing, distribution, monitoring, and management of content at a reduced cost. Evertz also has an impeccable reputation as a leading broadcast and video networking industry innovator.
Evertz’s revenues almost halved in the first quarter. Customer shutdowns, travel restrictions, and stalled projects as a result of the Covid-19 pandemic led to a fall in revenues. International revenues, in particular, received a strong beating.
The company spent nearly 30% of its sales on R&D activities which increased from 22% in the year-ago period. Its R&D investments have grown to $90.8 million in the last year from $66.9 million five years ago. Evertz’s focus on R&D and investment in new product developments should support top-line growth despite the uncertainty surrounding the pandemic.
Its revenues have grown at a rate of more than 6% CAGR in the last five years.
Evertz returned excess capital to shareholders through a special dividend of $0.90 per share over and above normal dividends of $0.72 per share in the last year. The company sports an attractive dividend yield of 2.8% and a reasonable payout ratio of 49%. Its dividends have grown at a rate of more than 8% CAGR in the last decade.
Evertz has a strong balance sheet and generates enough cash from operations. The company, however, halved its dividend payments recently.
The demand for Evertz’s products and solutions should increase to support the increasingly complex multi-channel needs of digital and high definition television. The company is a leader in the expanding IPTV market and in SDVN technology.
Increasing consumer appetite for high-quality video and enhanced audio and growing demand for live content act as strong tailwinds for the company. Evertz’s video domain knowledge and internal development of leading-edge technologies are its unique competitive advantages.
As the market leader, it is well-positioned to gain from the large opportunities at hand.
Evertz typically sells hardware and software solutions including related services, training and commissioning on a standalone basis. As such, the company is well-positioned to cross-sell its products to customers.
Its contract contains a bundle of items priced together at a single price. Certain of Evertz’s contracts are long term in nature. All these factors grant significant visibility to the company’s cash flows. The company is also looking at expanding its footprint in other geographic regions.
Its 2021 plan is to invest in new technologies, leverage and expand its industry-leading IP, IT installations, and virtual Cloud solutions and gain industry-wide adoption and within vertical markets.
Evertz enjoys a first-mover advantage to establish itself as the leading supplier to the broadcast industry.
The company has maintained its track record of rapid innovation and spends aggressively on R&D activities to stay at the forefront of the industry. But it expects to continue experiencing competitive pricing pressures.
The company competes with Maxar Technologies, which is a leading global provider of Earth intelligence and advanced space infrastructure technology solutions.
Evertz is a world leader in video technology. It stands a good chance to benefit from the ongoing technical transition to IP and IT-based production, workflow, and distribution systems helping its customers to create more efficient and agile workflows.
Technological leadership and operational strength should enable the company to emerge as a winner from this pandemic. The company believes the pandemic situation is temporary and is well-positioned to benefit from an economic revival.
Software should have continued to do well during the pandemic and as such I am a little concerned even if the company feels confident. It’s either a value-trap or a money make but after 6 moths, investors have voted …