MIND C.T.I. Ltd. strong balance sheet, undervalued micro cap

Johnny HopkinsStocksLeave a Comment

This week the ‘Small and Micro Cap’ screener uncovered a little gem called MIND C.T.I. Ltd. (NASDAQ:MNDO)

MIND CTI is a leading provider of convergent end-to-end prepaid/postpaid billing and customer care product based solutions for service providers as well as unified communications analytics and call accounting solutions for enterprises.

Last week the company announced results for its first quarter ended March 31, 2016.

Financial highlights included:

  • Revenues were $4.6 million, compared with $5.7 million in the first quarter of 2015
  • Operating income was $1.1 million, or 25% of total revenues, compared with $1.6 million in the first quarter of 2015, or 27% of total revenues
  • Net income was $1.2 million, or $0.06 per share, compared with $0.9 million, or $0.05 per share in the first quarter of 2015

Monica Iancu, MIND CTI CEO, commented: “In today’s highly competitive telecom markets, MVNO’s and rural carriers encounter difficulties in competing with the larger players and many of them sell their operations. During our twenty years of operation, we have experienced similar market trend changes and we executed successfully in shifting our focus towards new opportunities. Our versatile and comprehensive billing platform fits perfectly with quad play service providers.”

“In Q1 we successfully completed our deployment for such a quad play carrier, including billing for cable deployment that includes also workforce management. As previously announced, consolidation in the telecom markets was not favorable to us and many decision processes are extended or constantly delayed. We continue investing in technology, seeking to enter new markets and focusing on our profitability targets.”

Now here’s what I really like about MIND CTI.

A quick look at the company’s First Quarter 2016 balance sheet (below) shows cash and cash equivalents, and marketable securities of around $13 million, which by itself doesn’t mean anything.

(Source: Company Reports)

But, when you compare it to the company’s liabilities (below), what you can see is that the company has zero debt.

(Source: Company reports)

These are the types of companies that I love to invest in, and even though revenues were down for the quarter (below), compared to the previous corresponding period, MIND CTI still managed to maintain healthy margins, thanks to a reduction in its Cost of Revenues and General and Administrative expenses.

(Source: Company reports)

MIND CTI is suffering from a downturn in the telecommunications sector as a whole, but is obviously well run to withstand this downturn.


MIND CTI currently has a market cap of around $40 million, but it has $13 million in excess cash after debt considerations, giving it an Enterprise Value of $27 million. With operating earnings of $6 million YTD this means the company has an Acquirer’s Multiple of 4.39, and its currently trading of a P/E of just 7.54. If you’re an investor looking for dividends, the company also has a dividend yield of 13%.

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