Sierra Wireless (TSX: SW)(NASDAQ: SWIR) is a Vancouver-based company that provides device-to-cloud (IoT) solutions in the Americas, Europe, and around the world. Today, I want to look at what has sparked momentum for this tech stock since the beginning of May. Is it worth jumping on this wave? Let’s dive in.
How has this tech stock performed so far in 2022?
Shares of Sierra Wireless have shot up 46% month over month as of close on June 3. The stock has increased 41% so far in 2022. This represents its highest price point since the summer of 2017. At the time, the company drew some positive attention due to its acquisition of Numerex. The momentum would not last, and the tech stock suffered a slide that would stretch all the way to the March 2020 market pullback.
Fortunately, it has been clearer skies since plunging into single digits price wise during that violent correction. The company has garnered some positive attention once again in the wake of an aggressive 5G rollout. Moreover, it released its first-quarter 2022 results on May 11.
Should investors be encouraged after Sierra Wireless’s earnings release?
In Q1 2022, the company reported strong revenue growth of 60% to $173 million. It was powered by improved demand as well as the “realization of investments in inventory” according to the quarterly report. However, Sierra did have a rough first quarter of 2021 that included a damaging ransomware attack.
Sierra delivered growth in both its IoT Solutions and Enterprise Solutions segments. In IoT Solutions, revenue rose 79% to $133 million. This segment continued to be bolstered by strong demand for connected devices around the world. Meanwhile, the Enterprise Solutions segment posted revenue growth of 17% to $39.2 million. Sierra benefited from impressive demand for routers in its industrial and public safety verticals.
The company reported adjusted earnings from continuing operations of $8.6 million or $0.23 per share — up from an adjusted loss of $9.6 million, or $0.26 per share, in Q1 2021. Better yet, adjusted EBITDA climbed to $15.8 million compared to an adjusted EBITDA loss of $4.4 million.
This was a solid start to the new fiscal year. That said, Sierra has continued to feel the lingering effects of the COVID-19 pandemic. For its outlook, Sierra cited the after-effects of the pandemic as a key reason that it will be difficult to estimate its earnings in the near term. That said, it still projects revenue between $160 million to $175 million, as it is set to benefit from strong demand and investment in its inventory.
Is Sierra Wireless still worth buying today?
Investors should still be eager to get in on the wireless services space. The growth of 5G will continue to elevate this sector as demand for wireless connectivity and improved speeds among the global population remains electric. Shares of this tech stock are trading in favourable value territory compared to its industry peers. Sierra is a tech stock that looks certain to deliver on promising revenue growth in this uncertain economic environment.
