Syniverse Holdings Inc. (SVR) shares have spiked on acquisition news and estimates are climbing.

Company Description

Syniverse provides technology to the wireless communications industry. The company’s products provide a seamless global network by integrating multiple carriers’ networks.

Leading the Pack

Syniverse is the top rated company in its industry on Zacks.com. The company operates with a net profit margin of 15.5%, compared to the industry average 1.2%. Syniverse is returning 18.4% on equity, well above the 2.1% its peers normally generate.

Additionally, Syniverse carries a debt-to-equity ratio of 0.9 times, a third of the industry average. Shares are also a solid value at just 11 times earnings in a sector that often sees bloated valuations.

Making the Grade

On Aug 5 Syniverse met analysts’ expectations by reported net income of $25.4 million, or 34 cents per share after adjustments. Revenues and income are down year-over-year but the company sees plenty of opportunity in the future.

Tony Holcombe, President and CEO said, “Our transaction-based business continues to perform, and we continue to believe that the global surge in smartphone penetration, messaging and mobile data usage provides Syniverse with a solid operating environment.”

Estimates Rising

Following the earnings release analysts began raising full-year estimates. The Zacks Consensus Estimate for this year is up a nickel to $1.45

Next year’s estimates are averaging $1.76, up 19 cents. Given these numbers, growth is expected to tip this year before growing 21% next year.

The Chart

Shares of SVR fell on the earnings news but rebounded sharply on news that the company would acquire VeriSign’s Messaging business. The group generated annual revenue of $140 million in the past year.

Zacks Investment Research
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