NasdaqGM:JCS

Stock Analysis Report

Communications Systems

Executive Summary

Communications Systems, Inc., through its subsidiaries, manufactures and sells connectivity infrastructure products for broadband and voice communications in North America, Europe, the Middle East, Africa, and internationally.

Rewards

Trading at 28.2% below its fair value

Became profitable this year

Risk Analysis

Highly volatile share price over past 3 months

Large one-off items impacting financial results

Does not have a meaningful market cap ($56M)



Snowflake Analysis

Flawless balance sheet and undervalued.

Share Price & News

How has Communications Systems's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: JCS's share price has been volatile over the past 3 months.


Market Performance


7 Day Return

-6.9%

JCS

0.1%

US Communications

-1.2%

US Market


1 Year Return

156.4%

JCS

5.4%

US Communications

22.3%

US Market

Return vs Industry: JCS exceeded the US Communications industry which returned 6.7% over the past year.

Return vs Market: JCS exceeded the US Market which returned 24.7% over the past year.


Shareholder returns

JCSIndustryMarket
7 Day-6.9%0.1%-1.2%
30 Day-4.4%2.9%1.6%
90 Day32.7%3.8%8.8%
1 Year161.6%156.4%7.6%5.4%25.0%22.3%
3 Year31.5%18.9%51.0%41.4%49.9%40.3%
5 Year-25.8%-41.0%83.4%62.9%77.6%58.0%

Price Volatility Vs. Market

How volatile is Communications Systems's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Communications Systems undervalued compared to its fair value and its price relative to the market?

28.4%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: JCS ($6.08) is trading below our estimate of fair value ($8.46)

Significantly Below Fair Value: JCS is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: JCS is good value based on its PE Ratio (14x) compared to the Communications industry average (21.1x).

PE vs Market: JCS is good value based on its PE Ratio (14x) compared to the US market (18.9x).


Price to Earnings Growth Ratio

PEG Ratio: Insufficient data to calculate JCS's PEG Ratio to determine if it is good value.


Price to Book Ratio

PB vs Industry: JCS is good value based on its PB Ratio (1.2x) compared to the US Communications industry average (1.9x).


Next Steps

Future Growth

How is Communications Systems forecast to perform in the next 1 to 3 years based on estimates from 1 analyst?

-1.1%

Forecasted annual revenue growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: Insufficient data to determine if JCS's forecast earnings growth is above the savings rate (1.7%).

Earnings vs Market: Insufficient data to determine if JCS's earnings are forecast to grow faster than the US market

High Growth Earnings: Insufficient data to determine if earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: JCS's revenue is expected to decline over the next 3 years (-1.1% per year).

High Growth Revenue: JCS's revenue is forecast to decline over the next 3 years (-1.1% per year).


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: Insufficient data to determine if JCS's Return on Equity is forecast to be high in 3 years time


Next Steps

Past Performance

How has Communications Systems performed over the past 5 years?

-5.6%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: JCS has a large one-off gain of $2.5M impacting its September 30 2019 financial results.

Growing Profit Margin: JCS became profitable in the past.


Past Earnings Growth Analysis

Earnings Trend: JCS has become profitable over the past 5 years, growing earnings by -5.6% per year.

Accelerating Growth: JCS has become profitable in the last year, making the earnings growth rate difficult to compare to its 5-year average.

Earnings vs Industry: JCS has become profitable in the last year, making it difficult to compare its past year earnings growth to the Communications industry (12.6%).


Return on Equity

High ROE: JCS's Return on Equity (8.7%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Communications Systems's financial position?


Financial Position Analysis

Short Term Liabilities: JCS's short term assets ($48.0M) exceed its short term liabilities ($11.1M).

Long Term Liabilities: JCS's short term assets ($48.0M) exceed its long term liabilities ($355.8K).


Debt to Equity History and Analysis

Debt Level: JCS is debt free.

Reducing Debt: JCS has no debt compared to 5 years ago when its debt to equity ratio was 0.9%.

Debt Coverage: JCS has no debt, therefore it does not need to be covered by operating cash flow.

Interest Coverage: JCS has no debt, therefore coverage of interest payments is not a concern.


Balance Sheet

Inventory Level: JCS has a high level of physical assets or inventory.

Debt Coverage by Assets: Insufficient data to determine if JCS's debt is covered by short term assets.


Next Steps

Dividend

What is Communications Systems's current dividend yield, its reliability and sustainability?

1.32%

Current Dividend Yield


Dividend Yield vs Market

company1.3%marketbottom25%1.4%markettop25%3.7%industryaverage2.9%forecastin3Yearsn/a

Current dividend yield vs market & industry

Notable Dividend: JCS's dividend (1.32%) isn’t notable compared to the bottom 25% of dividend payers in the US market (1.4%).

High Dividend: JCS's dividend (1.32%) is low compared to the top 25% of dividend payers in the US market (3.66%).


Stability and Growth of Payments

Stable Dividend: JCS's dividend payments have been volatile in the past 10 years.

Growing Dividend: JCS's dividend payments have fallen over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its low payout ratio (18.5%), JCS's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: Insufficient data to determine if a dividend will be paid in 3 years and that it will be covered by earnings.


Next Steps

Management

What is the CEO of Communications Systems's salary, the management and board of directors tenure and is there insider trading?

6.0yrs

Average management tenure


CEO

Roger Lacey (69yo)

5.6yrs

Tenure

US$685,038

Compensation

Mr. Roger H. D. Lacey has been the Chief Executive Officer of Communications Systems Inc. since February 27, 2015 and served as its President. Mr. Lacey has been Executive Chairman of Communications System ...


CEO Compensation Analysis

Compensation vs Market: Roger's total compensation ($USD685.04K) is above average for companies of similar size in the US market ($USD519.76K).

Compensation vs Earnings: Roger's compensation has been consistent with company performance over the past year.


Management Age and Tenure

6.0yrs

Average Tenure

53yo

Average Age

Experienced Management: JCS's management team is seasoned and experienced (6 years average tenure).


Board Age and Tenure

1.1yrs

Average Tenure

69yo

Average Age

Experienced Board: JCS's board of directors are not considered experienced ( 1.1 years average tenure), which suggests a new board.


Insider Trading

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

SellUS$146,32223 Jan 20
GAMCO Investors, Inc.
EntityCompany
Shares17,818
Max PriceUS$9.55
BuyUS$20,17623 Jan 20
Gabelli Foundation Inc, Endowment Arm
EntityCompany
Shares3,000
Max PriceUS$6.73
BuyUS$41,63823 Jan 20
GAMCO Investors, Inc.
EntityCompany
Shares6,450
Max PriceUS$6.59
BuyUS$99112 Sep 19
Roger Lacey
EntityIndividual
Role
Chief Executive Officer
Executive Chairman
Shares200
Max PriceUS$4.95
SellUS$3,85130 Aug 19
GAMCO Investors, Inc.
EntityCompany
Shares1,000
Max PriceUS$3.85
BuyUS$15,49930 Aug 19
Gabelli Foundation Inc, Endowment Arm
EntityCompany
Shares3,707
Max PriceUS$4.18
BuyUS$441,48130 Aug 19
GAMCO Investors, Inc.
EntityCompany
Shares105,214
Max PriceUS$4.39
BuyUS$1,06422 Aug 19
Mark Fandrich
EntityIndividual
Role
Chief Financial Officer
CFO, Treasurer
Shares250
Max PriceUS$4.28
BuyUS$14,06429 May 19
Steven Webster
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares5,000
Max PriceUS$2.82

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Management Team

  • Mark Fandrich (57yo)

    CFO, Treasurer

    • Tenure: 3.4yrs
    • Compensation: US$413.88k
  • Dick Primuth (73yo)

    Secretary & Director

    • Tenure: 6.3yrs
    • Compensation: US$72.15k
  • Roger Lacey (69yo)

    Executive Chairman

    • Tenure: 5.6yrs
    • Compensation: US$685.04k
  • Scott Fluegge (49yo)

    President & GM of JDL Technologies

    • Tenure: 6.3yrs
    • Compensation: US$329.53k
  • Sev Sadura (48yo)

    General Manager of Suttle

    • Compensation: US$211.52k
  • Kristin Hlavka (37yo)

    Corporate Controller

    • Tenure: 8.7yrs
    • Compensation: US$200.67k

Board Members

  • Curt Sampson (84yo)

    Founder & Chairman Emeritus

    • Tenure: 1.1yrs
    • Compensation: US$44.65k
  • Randy Sampson (61yo)

    Lead Independent Director

    • Tenure: 1.1yrs
    • Compensation: US$37.15k
  • Dick Primuth (73yo)

    Secretary & Director

    • Tenure: 6.3yrs
    • Compensation: US$72.15k
  • Roger Lacey (69yo)

    Executive Chairman

    • Tenure: 5.6yrs
    • Compensation: US$685.04k
  • Steven Webster (62yo)

    Independent Director

    • Tenure: 2.7yrs
    • Compensation: US$32.15k

Company Information

Communications Systems, Inc.'s company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Communications Systems, Inc.
  • Ticker: JCS
  • Exchange: NasdaqGM
  • Founded: 1969
  • Industry: Communications Equipment
  • Sector: Tech
  • Market Cap: US$56.150m
  • Shares outstanding: 9.28m
  • Website: https://www.commsystems.com

Number of Employees


Location

  • Communications Systems, Inc.
  • 10900 Red Circle Drive
  • Minnetonka
  • Minnesota
  • 55343
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
JCSNasdaqGM (Nasdaq Global Market)YesCommon StockUSUSDNov 1981

Biography

Communications Systems, Inc., through its subsidiaries, manufactures and sells connectivity infrastructure products for broadband and voice communications in North America, Europe, the Middle East, Africa, and internationally. The company’s Transition Networks segment designs, assembles, and markets media converters, NIDs, network interface cards, Ethernet switches, small form factor pluggable modules, and other connectivity products under the Transition Networks brand name. This segment sells its products through distributors, resellers, integrators, and original equipment manufacturers (OEMs) to the federal government, enterprise, service provider, industrial, security, and surveillance markets. Its Suttle segment provides enclosure systems to support premise distribution of broadband and other connectivity networks; fiber optic management and connectivity solutions for access and premise networks; and modular connecting products for copper telecommunications networks, as well as DSL products that support broadband connectivity to copper networks under the Suttle brand name. This segment serves telephone companies, electrical/low-voltage contractors, home builders, cable customers, and OEMs directly, as well as through distributors. The company’s JDL Technologies segment offers information technology managed services; network design, deployment, and integration; cloud, hosted, and virtualization services; and remote support and management services. This segment serves education, healthcare, and commercial markets. Its Net2Edge segment designs, manufactures, and markets carrier Ethernet based network access devices and software under the Liberator brand name. This segment serves government, enterprise, utility, industrial, and surveillance markets, as well as service providers through direct sales model, and approved partners and integrators. Communications Systems, Inc. was founded in 1969 and is headquartered in Minnetonka, Minnesota. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/01/26 23:34
End of Day Share Price2020/01/24 00:00
Earnings2019/09/30
Annual Earnings2018/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.