Aviat Networks Inc Shares Gain 97% Year-to-Date; Outlook Remains Bullish

Aviat Networks Stock Trounces Broader Market on Strong Financials

Aviat Networks Inc (NASDAQ:AVNW) has been taking full advantage of the 5G tailwinds. AVNW stock is up by an eyewatering 673% year-over-year and 96% year-to-date.

The best part is that the rollout of 5G technology is just beginning.

A developer of advanced microwave technology used in wireless infrastructure, Aviat recently reported another quarter of record financial results and a very successful first half of its fiscal year.

With the momentum expected to continue, the outlook for Aviat Networks stock is bullish.

Chart courtesy of StockCharts.com

AVNW Stock Overview

Aviat Networks Inc is a supplier of microwave networking solutions critical for 5G networks, private networks, and rural broadband. While 5G presents a large and growing opportunity, rural broadband also presents significant growth opportunities.

The company’s products are used by the offshore oil and gas industry, transportation sector, schools, Internet service providers, high-frequency traders, government agencies, and broadcast network operators around the world. (Source: “Corporate Presentation: February 2021,” Aviat Networks Inc, last accessed March 24, 2021.)

The company’s most recent customer wins include Dish Network Corp (NASDAQ:DISH), Safaricom PLC, Globe Telecom, Inc. (OTCMKTS:GTMEF), Virginia State Police, Nextlink Internet, and LTD Broadband.

On March 5, Aviat announced that it will be enacting a two-for-one stock split on April 1. The company said it is doing so to make AVNW stock more accessible to a broader base of investors. (Source: “Aviat Networks Announce Two-for-One Stock Split,” Aviat Networks Inc, March 5, 2021.)

Record Q2 Results

For the second quarter of fiscal 2021 ended January 1, 2021, Aviat announced that its total revenue increased 26.0% year-over-year to $70.5 million. Its North American sales went up 34.8% while its international sales climbed 9.5%. (Source: “Aviat Networks Announces Fiscal 2021 Second Quarter and Six Months Financial Results,” Aviat Networks Inc, February 3, 2021.)

The company’s second-quarter net income was $6.6 million ($1.16 per share), compared to a second-quarter 2020 net loss of $1.7 million ($0.31 loss per share). Its second-quarter adjusted net income was $8.4 million ($1.48 per share), versus an adjusted net loss of $900,000 ($0.17 loss per share).

Aviat Networks Inc’s adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) in the second quarter of fiscal 2021 were $10.1 million, compared to $400,000 in the comparable period of fiscal 2020, a year-over-year improvement of $9.7 million.

For the six months ended January 1, 2021, Aviat reported total revenues of $136.8 million, a 19% increase over the $114.6 million in the comparable period of fiscal 2020.

The company’s income in the six months ended January 1 was $12.6 million ($2.23 per share), compared to a net loss of $1.6 million ($0.30 loss per share) in the same period of the previous year. Its adjusted net income was $15.3 million ($2.71 per share), versus $2.0 million ($0.36 per share) in the comparable period of fiscal 2020.

The company ended the second quarter with cash and cash equivalents of $43.0 million, compared to $36.2 million at the end of the first quarter of fiscal 2021.

Aviat has no loans outstanding, and the company expects its net cash position to improve throughout the remainder of the fiscal year.

Analyst Take

Aviat Networks stock is a great 5G stock. The company recently reported its highest quarterly revenue in more than five years, as well as record adjusted EBITDA margins.

In spite of the tough COVID-19 environment, Aviat Networks Inc continues to have a solid balance sheet and liquidity position. With a market cap of just $372.7 million, Aviat has lots of room to grow and is a potential takeover target.