Hi there,
From what I see of Sangoma - it has performed quite well. It returned 77% in 2018 and 100% in 2019. In 2020, the stock is flat and is likely to hover around today's price-points as it just announced an $80 million share offering at $2.30 per share. That being said, proceeds will be used to fund future acquisitions. This is not out of the ordinary for small cap stocks who don't have ready access to the debt markets like the larger caps do.
It is also not out of the ordinary for the company, and they have put capital raises to good use in the past. When it comes to small caps, I like to see consistent and accelerating revenue growth. In this area, STC is also doing quite well. Revenue jumped from $21.2 million in 2016 to $109.64 million in 2019. On a trailing twelve month basis it has generated $126 million and it is guiding to full-year revenue of $130 million at the mid-range. I like what i see here - consistent double digit growth. In 2021, expectations are for 31% revenue growth
In terms of valuation - it is a little expensive when compared to earnings (48 times forward earnings), however, it is quite cheap as compared to sale (1.58x). Granted, it is above the industry average of approximately 1.2 times sales. For growth stocks, I prefer to look at revenue as earnings can be impacted by several one-time charges.
Analysts are quite bullish on the company. They have a one-year price target of $3.64 which implies ~50% upside from today's price. All four rate it a buy.
Overall, I like what i see from this company. The growth through acquisition strategy is a proven model for those who are adept at integrating acquisitions. From what I can tell, Sangoma is executing well in this area. As an open source company, it is what i would refer to as an industry disruptor. Despite operating in a highly competitive area, this is what sets them apart.
Investing in companies like Sangoma requires a higher risk profile as growth could suddenly come to a halt. This would send the share price crashing. Likewise, it has a mixed history of meeting estimates, and as such is likely to be considerably volatile around earnings.
Mat