Lantronix Inc Up 63% in One Month & Just Getting Started

Lantronix Stock Bullish on Record Results & Acquisition

Until recently, the performance of Lantronix Inc (NASDAQ:LTRX) shares had been a little underwhelming. LTRX stock was great for day traders, but for buy-and-hold investors, it was a lesson in patience.

That changed in late August after the company reported record fourth-quarter and full-year fiscal 2021 results. At the time, management said Lantronix Inc’s revenue was growing organically at a double-digit rate, and that they expected more of the same in fiscal 2022.

Management said it expects revenue for fiscal 2022 to grow by 45%–75% and its adjusted earnings per share (EPS) to grow by 85%–135%.

The company is off to a good start. On October 28, Lantronix Inc reported record preliminary revenue, fueled by record backlog, high demand, and concerted efforts to mitigate supply chain disruptions.

Investors and Wall Street like what they see. As of this writing, Lantronix stock is up by:

• 63% since the start of October
• 82% over the last three months
• 111% year-to-date
• 123% year-over-year

While there’s every reason to believe LTRX stock will take a short-term breather on well-deserved profit-taking (thanks to Lantronix Inc’s record financial results and strong guidance), there’s also every reason to believe Lantronix stock’s upward trajectory will continue in 2022.

Chart courtesy of StockCharts.com

About LTRX Stock

Lantronix is a global provider of software as a service (SaaS), engineering services, connectivity services, hardware, and turnkey solutions for the Internet of Things (IoT) and remote environment management (REM). (Source: “Investor Presentation,” Lantronix Inc, last accessed November 8, 2021.)

The company’s services and products address each layer of the IoT stack, enabling its customers to deploy IoT and REM solutions. Its solutions can be found in data centers, test labs, server rooms, offices, and remote sites.

Lantronix Inc’s key markets include industrial automation, health care, utilities, retail, logistics, telecom, finance, data centers, and automotive.

Acquisition of Transition Networks & Net2Edge

In early August, Lantronix completed the previously announced $25.0-million acquisition of Transition Networks and Net2Edge, which made up the majority of Communications Systems, Inc.‘s (NASDAQ:JCS) Electronics and Software business segment. (Source: “Lantronix Completes Acquisition of Electronics and Software Reportable Business Segment from Communications Systems, Inc.” Lantronix Inc, August 2, 2021.)

Lantronix sees significant operating and product development synergies in the combined company.

The acquisition strengthens the company’s exposure to the smart city, intelligent transportation, and security markets. It also broadens Lantronix Inc’s customer base, increases cross-selling opportunities, and accelerates turnkey IoT capabilities.

The combined company’s revenue is expected to exceed $100.0 million annually. The company also expects to realize significant, immediate accretion to adjusted EPS and $7.0 million in annual run-rate synergies in the first 24 months of the acquisition. 

Record 2021 Results & Preliminary Q1 2022 Results

In late August, Lantronix announced that its revenue for the fourth quarter of fiscal 2021 (ended June 30) increased by 19% year-over-year and 21% sequentially to a record $20.6 million. (Source: “Lantronix Reports Record Results for Fourth Quarter and Fiscal 2021,” Lantronix Inc, August 26, 2021.)

Its full-year revenue climbed by 19% year-over-year to a record $71.5 million.

Its fourth-quarter EPS increased to a loss of $0.04, compared to a loss of $0.04 in the previous quarter and a loss of $0.06 in the fourth quarter of last year. Lantronix Inc’s adjusted EPS improved to $0.06, from 0.05 in the previous quarter and $0.04 in the fourth quarter of last year.

In late October, The company reported preliminary revenue results for the first quarter of fiscal 2022 (ended September 31, 2021).

For the first quarter of fiscal 2022, Lantronix expects to report record revenues greater than $27.0 million, which represents year-over-year growth of at least 58%. (Source: “Lantronix Announces Preliminary Record Revenue Results for First Quarter of Fiscal 2022 With Final Results to Be Reported on November 11, 2021,” Lantronix Inc, October 28, 2021.)

For full-year fiscal 2022, the company expects year-over-year revenue growth of 45%–75% and adjusted EPS growth of 85%–135%. (Source: Lantronix Inc, August 26, 2021, op. cit.)

Lantronix will announce its financial results for the first quarter of fiscal 2022 after the markets close on November 11, 2021.

Analyst Take

Once-overlooked Lantronix Inc is starting to attract the attention of Wall Street.

Lantronix stock is up by more than 120% year-over-year and 50% over the last month on record fiscal 2021 and preliminary first-quarter 2022 financial results.

The excellent results and outlook led one analyst to nearly double their share-price target for LTRX stock from $7.00 to $13.00.