Spok Holdings, Inc. (SPOK) operates as a healthcare communication solution provider, serving businesses, professionals, management personnel, medical personnel, field sales personnel and service forces, manufacturing organizations, and government agencies.
On October 26, the company declared a regular quarterly dividend of $0.3125 per share, payable to shareholders on December 9, 2022. SPOK’s consistent dividend payments for the last 12 years reflect its steady income stream and ability to generate cash.
SPOK’s quarterly dividend cumulates to an annual payout of $1.25, which yields 14.81% on the current share price. The company’s four-year average yield stands at 5.85%. Its dividend payouts have grown at CAGRs of 7.2% and 28.6% over the past five years and three years, respectively.
The stock has gained 16.4% over the past six months and 19.6% over the past three months. Also, it has gained 9.3% over the past month to close its last trading session at $8.44. It is trading higher than its 50-Day and 200-day moving averages of $7.73 and $7.66, respectively, indicating an uptrend.
Here are the factors that could influence SPOK’s performance in the near term:
Strong Bottom-line Growth
For the fiscal third quarter ended September 30, SPOK’s operating income came in at $3.54 million, up 199.5% year-over-year. Its net income and net income per common share rose 217.1% and 215.4% from the prior-year quarter to $2.92 million and $0.15, respectively. Adjusted EBITDA improved 286.6% year-over-year to $4.66 million.
Solid Upside Potential
The only Wall Street analyst rating the stock in the past three months has rated it a ‘Buy.’ The analyst’s 12-month price target of $15 indicates a 77.7% potential upside from the last closing price.
Mixed Valuation
In terms of its forward EV/EBITDA, SPOK is trading at 72.09x, significantly higher than the industry average of 7.94x. The stock’s forward Price/Sales multiple of 1.24 is 6.3% higher than the industry average of 1.17.
However, in terms of its forward EV/Sales, SPOK is trading at 1.13x, 38.5% lower than the industry average of 1.84x. Its trailing-12-month Price/Book multiple of 1.08 is 31.6% lower than the industry average of 1.58.
POWR Ratings Reflect Promising Prospects
SPOK’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight distinct categories. SPOK has a Growth grade of A, in sync with its solid bottom-line growth in the last quarter.
The stock has a B grade for Sentiment, consistent with the upside expected by the Wall Street analyst. It also has a C grade for Value, which is justified by its mixed valuation.
In the 20-stock Telecom – Domestic industry, it is ranked #1.
Click here to see the additional POWR Ratings for SPOK (Momentum, Stability, and Quality).
View all the top stocks in the Telecom – Domestic industry here.
Bottom Line
SPOK has raised its fiscal 2022 total revenue guidance from $131.50 million to $136 million, indicating management’s confidence in the company’s growth. This, along with SPOK’s high dividend yield and consistent dividend payments, makes it a solid choice for investors looking for passive income.
How Does Spok Holdings, Inc. (SPOK) Stack up Against Its Peers?
While SPOK has an overall POWR Rating of A, one might consider looking at its industry peers, Verizon Communications Inc. (VZ) and Ooma, Inc. (OOMA), which have an overall B (Buy) rating.
SPOK shares were unchanged in premarket trading Thursday. Year-to-date, SPOK has gained 2.20%, versus a -20.32% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.
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