Comtech Telecommunications: Higher-Margin Business Is Paying Off, But Profitability Still Eludes Them

Jason Ditz1.5K FollowersFollow5ShareSavePlay(9min)CommentsSummaryComtech Telecommunications has transitioned to higher-margin offerings, improving gross margins and nearing operating breakeven despite recent revenue headwinds.CMTL's Satellite segment has exited low-margin contracts, while the Allerium segment remains a stable, profitable contributor.A $732 million backlog and five consecutive EPS beats suggest operational improvements, but government shutdowns and customer concentration pose ongoing risks.I rate CMTL as a hold with a slight bias toward buy, pending clearer evidence of sustainable profitability and margin expansion. GoodLifeStudio/iStock via Getty Images When they’re growing into an established business, many companies are chasing revenue growth, excluding all else, and find that what they’ve built isn’t nearly as lucrative as they were hoping it would be. I bringThis article was written byJason Ditz1.5K FollowersFollowI’m Jason Ditz and I have 20 years of experience in foreign policy research. My work has appeared in Forbes, Toronto Star, Minneapolis Star-Tribune, Providence Journal, Washington Times and the Detroit Free Press, as well as American Conservative Magazine and the Quincy Institute for Responsible Statecraft. I have been writing investment analysis, with a focus on deep-discount value plays, for over 25 years. I I got my start analyzing securities for a stock-picking contest on the now defunct StockJungle in college. After winning one of the top prizes for quarterly performance, I was hired to write a monthly article about micro-cap stocks, again with a value perspective. After StockJungle went belly-up, with its focus on momentum investing, I started to take a close interest in the contrarian investment philosophy of David Dreman. I began writing for Motley Fool and ultimately Seeking Alpha. My goal is to find underappreciated companies with a focus on returning value to investors.Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.