The transformative potential of artificial intelligence (AI) and AI tools has caught the fancy of the investing public. Market analysts say AI stocks are the “next big thing” if you invest in tomorrow. People are also consumed by the fear of missing out (FOMO), especially with the meteoric rise of NVIDIA in the U.S.
However, not all companies claiming AI capabilities or using AI tools are noteworthy investments. They are riding on the hype and narrative of next-gen technology.
Meanwhile, Evertz Technologies (TSX: ET), one of the largest pure players in Canada’s technology sector, could be the “next big thing.” Unlike AI pretenders, this growth-oriented global technology company is profitable and has a captured market in an important industry.
Moreover, Evertz is rare gem because it also pays dividends. At $13.58 per share, the tech stock is up 28.27% from a year ago, and current investors partake in the hefty 5.74% dividend yield.
With market analysts forecasting a 32.5%average upside potential in 12 months, prospective investors can earn two ways: capital gains from price appreciation and quarterly dividends. Assuming you invest $14,000 today, the money transforms into $200.90 in quarterly passive income.
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Business overview
Evertz designs, manufactures and markets video and audio infrastructure solutions globally. The $1.03 billion company from Burlington caters to clients in the television, telecommunications and new-media industries. Evertz Microsystems Limited, a subsidiary, delivers content to television sets, on-demand services, WebTV, IPTV, and mobile devices such as phones and tablets.
Industry players with broadcast facilities across continents turn to Evertz for software and hardware solutions, if not complete broadcast solutions. Evertz’s end-to-end broadcast solutions cover all aspects of broadcast production, whether content creation, distribution, and delivery.
Record revenues, strong momentum
Evertz achieved record annual revenues of $454.5 million in fiscal 2023, and the significant momentum from a successful year carried over into fiscal 2024. The company also won or received several awards in recognition of its contribution to the broadcast industry.
Management sees numerous large, exciting opportunities this year, and Evertz is well-positioned to capitalize on them. At the close of fiscal 2023, its director, president, and chief executive officer, Romotto Mageralli, said there is strong demand for Evertz’s IP, IT & Cloud native services and solutions with influential industry leaders worldwide.
In the first three quarters of fiscal 2024 (nine months ending January 31, 2024), revenue rose 20.3% year over year to $391.8 million. Net earnings climbed 24.3% to $57.2 million from a year ago. Thus far in fiscal 2024, the revenue outlook within the cloud-native technology and service business is bright, given the significant orders and increase in backlog.
The backlog on year-end fiscal 2023 was $392 million, representing a 165% jump from the previous year. Besides the consistently rising revenue every year since 2021, dividend payments are likewise rising yearly due to excess cash flow.
Industry foothold
Evertz Technologies acknowledges the increasing complexity in the technology sector. However, the company is confident about its global market leadership position and technologically superior solutions in the broadcast industry. Notably, you don’t see an investment pitch relating to artificial intelligence but a foundation for growth.
