NasdaqGS:BAND

Stock Analysis Report

Executive Summary

Bandwidth Inc. operates as a cloud-based software-powered communications platform-as-a-service (CPaaS) provider in the United States.

Rewards

Trading at 18.1% below its fair value

Revenue is forecast to grow 16.17% per year

Risk Analysis

Earnings are forecast to decline by an average of -74.7% per year for the next 3 years

High level of non-cash earnings

Highly volatile share price over past 3 months

Profit margins (1.4%) are lower than last year (9.7%)

+ 1 more risk


Snowflake Analysis

Flawless balance sheet and overvalued.


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Share Price & News

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


Latest Share Price and Events

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


Market Performance


7 Day Return

3.0%

BAND

0.05%

US Telecom

1.7%

US Market


1 Year Return

61.6%

BAND

12.9%

US Telecom

23.2%

US Market

Return vs Industry: BAND exceeded the US Telecom industry which returned 12% over the past year.

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


Shareholder returns

BANDIndustryMarket
7 Day3.0%0.05%1.7%
30 Day13.3%-1.3%4.2%
90 Day21.7%-1.0%11.9%
1 Year61.6%61.6%18.4%12.9%25.8%23.2%
3 Yearn/a15.3%-1.5%52.8%42.9%
5 Yearn/a43.4%11.0%75.2%55.8%

Price Volatility Vs. Market

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


Simply Wall St News

Valuation

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

17.4%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: BAND ($70.51) is trading below our estimate of fair value ($86.07)

Significantly Below Fair Value: BAND is trading below fair value, but not by a significant amount.


Price To Earnings Ratio

PE vs Industry: BAND is poor value based on its PE Ratio (482.2x) compared to the Telecom industry average (16.5x).

PE vs Market: BAND is poor value based on its PE Ratio (482.2x) compared to the US market (18.9x).


Price to Earnings Growth Ratio

PEG Ratio: BAND's earnings are forecast to decline next year, so we can't calculate its PEG ratio.


Price to Book Ratio

PB vs Industry: BAND is overvalued based on its PB Ratio (6.1x) compared to the US Telecom industry average (1.5x).


Next Steps

Future Growth

How is Bandwidth forecast to perform in the next 1 to 3 years based on estimates from 8 analysts?

-74.7%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: BAND's earnings are forecast to decline over the next 3 years (-74.7% per year).

Earnings vs Market: BAND's earnings are forecast to decline over the next 3 years (-74.7% per year).

High Growth Earnings: BAND's earnings are forecast to decline over the next 3 years.

Revenue vs Market: BAND's revenue (16.2% per year) is forecast to grow faster than the US market (7.5% per year).

High Growth Revenue: BAND's revenue (16.2% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: BAND is forecast to be unprofitable in 3 years.


Next Steps

Past Performance

How has Bandwidth performed over the past 5 years?

-14.1%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: BAND has a high level of non-cash earnings.

Growing Profit Margin: BAND's current net profit margins (1.4%) are lower than last year (9.7%).


Past Earnings Growth Analysis

Earnings Trend: BAND's earnings have declined by -14.1% per year over the past 5 years.

Accelerating Growth: BAND's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: BAND had negative earnings growth (-83.2%) over the past year, making it difficult to compare to the Telecom industry average (-43.1%).


Return on Equity

High ROE: BAND's Return on Equity (1.2%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Bandwidth's financial position?


Financial Position Analysis

Short Term Liabilities: BAND's short term assets ($233.3M) exceed its short term liabilities ($41.1M).

Long Term Liabilities: BAND's short term assets ($233.3M) exceed its long term liabilities ($9.5M).


Debt to Equity History and Analysis

Debt Level: BAND is debt free.

Reducing Debt: BAND had no debt 5 years ago.

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

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


Balance Sheet

Inventory Level: BAND has a low level of unsold assets or inventory.

Debt Coverage by Assets: BAND's debt is not covered by short term assets (assets are -13724.2x debt).


Next Steps

Dividend

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


Dividend Yield vs Market

companyn/amarketbottom25%1.4%markettop25%3.6%industryaverage4.9%forecastin3Years0%

Current dividend yield vs market & industry

Notable Dividend: Unable to evaluate BAND's dividend yield against the bottom 25% of dividend payers, as the company has not reported any payouts.

High Dividend: Unable to evaluate BAND's dividend yield against the top 25% of dividend payers, as the company has not reported any payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if BAND's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if BAND's dividend payments have been increasing.


Current Payout to Shareholders

Dividend Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of BAND's dividend in 3 years as they are not forecast to pay a notable one for the US market.


Next Steps

Management

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

3.1yrs

Average board tenure


CEO

David Morken (50yo)

0yrs

Tenure

US$1,414,860

Compensation

Mr. David A. Morken serves as an Advisor of Sovereign's Capital. He focuses on investments in IT at the firm. He Co-Founded Bandwidth.com Inc. in 1999 and serves as its Chairman and Chief Executive Officer ...


CEO Compensation Analysis

Compensation vs Market: David's total compensation ($USD1.41M) is below average for companies of similar size in the US market ($USD3.86M).

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


Board Age and Tenure

3.1yrs

Average Tenure

53yo

Average Age

Experienced Board: BAND's board of directors are considered experienced (3.1 years average tenure).


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$1,425,75921 Aug 19
Henry Kaestner
EntityIndividual
Shares16,685
Max PriceUS$86.29
SellUS$2,923,57410 Jul 19
AMDG 1, LLC
EntityCompany
Shares37,741
Max PriceUS$78.45
SellUS$4,792,04702 Jul 19
AMDG 1, LLC
EntityCompany
Shares62,977
Max PriceUS$78.95
SellUS$773,50018 Jun 19
AMDG 1, LLC
EntityCompany
Shares10,000
Max PriceUS$77.35
SellUS$3,773,72013 Jun 19
AMDG 1, LLC
EntityCompany
Shares50,000
Max PriceUS$76.19
SellUS$57,40510 Jun 19
Lukas Roush
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares750
Max PriceUS$76.54

Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 23.8%.


Management Team

  • David Morken (50yo)

    Co-Founder

    • Compensation: US$1.41m
  • Noreen Allen

    Chief Marketing Officer

    • Chris Matton (49yo)

      General Counsel & Secretary

      • Tenure: 10yrs
      • Compensation: US$546.78k
    • Rebecca Bottorff

      Chief People officer

      • Kade Ross

        Chief Information Officer

        • Tenure: 0.3yrs
      • Jeff Hoffman (50yo)

        Chief Financial Officer

        • Compensation: US$1.14m
      • Ryan Henley

        Senior Vice President of Customer & Business Operations

        • Tom Steffens

          Senior Vice President of Product

          • Scott Mullen

            Chief Technology Officer

            • Sarah Walas

              Vice President of Investor Relations


              Board Members

              • Brian Bailey (52yo)

                Independent Director

                • Tenure: 6.9yrs
                • Compensation: US$148.64k
              • Julius Genachowski (56yo)

                Member of Advisory Board

                • David Morken (50yo)

                  Co-Founder

                  • Compensation: US$1.41m
                • Luke Roush (41yo)

                  Independent Director

                  • Tenure: 1.3yrs
                  • Compensation: US$28.32k
                • John Murdock (54yo)

                  Director

                  • Tenure: 4yrs
                  • Compensation: US$1.71m
                • Doug Suriano (58yo)

                  Independent Director

                  • Tenure: 2.3yrs
                  • Compensation: US$151.25k

                Company Information

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


                Key Information

                • Name: Bandwidth Inc.
                • Ticker: BAND
                • Exchange: NasdaqGS
                • Founded: 2000
                • Industry: Alternative Carriers
                • Sector: Telecom
                • Market Cap: US$1.671b
                • Shares outstanding: 23.49m
                • Website: https://www.bandwidth.com

                Number of Employees


                Location

                • Bandwidth Inc.
                • 900 Main Campus Drive
                • Suite 500
                • Raleigh
                • North Carolina
                • 27606
                • United States

                Listings

                TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
                BANDNasdaqGS (Nasdaq Global Select)YesClass A Common StockUSUSDNov 2017
                5XBDB (Deutsche Boerse AG)YesClass A Common StockDEEURNov 2017

                Biography

                Bandwidth Inc. operates as a cloud-based software-powered communications platform-as-a-service (CPaaS) provider in the United States. The company operates through two segments, CPaaS and Other. Its platform enables enterprises to create, scale, and operate voice or text communications services across mobile application or connected device. The company also provides SIP trunking, data resale, and hosted voice over Internet protocol services. It serves large enterprises, small and medium-sized businesses, technology companies, and other business. Bandwidth Inc. was founded in 2000 and is headquartered in Raleigh, North Carolina. 


                Company Analysis and Financial Data Status

                All financial data provided by Standard & Poor's Capital IQ.
                DataLast Updated (UTC time)
                Company Analysis2020/01/18 00:46
                End of Day Share Price2020/01/17 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.