Earnings Flash (BKTI) BK TECHNOLOGIES CORPORATION Posts Q3 Revenue $20.2M

For Immediate Releases

Chicago, IL – November 13, 2024 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include including Netflix, Inc. NFLX, Salesforce, Inc. CRM and Cisco Systems, Inc. CSCO and BK Technologies Corp. BKTI.

Here are highlights from Wednesday’s Analyst Blog:

Top Stock Reports for Netflix, Salesforce and Cisco

The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features new research reports on 16 major stocks, including Netflix, Inc., Salesforce, Inc. and Cisco Systems, Inc., as well as a micro-cap stock, BK Technologies Corp. These research reports have been hand-picked from roughly 70 reports published by our analyst team today.

You can see all of today’s research reports here >>>

Netflix’s shares have outperformed the Zacks Broadcast Radio and Television industry over the past two years (+169.1% vs. +77.1%). The Zacks analyst believes that the planned launch of an in-house ad tech platform next year signals the company's commitment to maximize its revenue stream, with ad revenues expected to roughly double year-over-year in 2025. A robust, localized and foreign-language content lineup and healthy customer engagement levels have helped.

However, stiff competition in the streaming space from the likes of Apple, Amazon Prime Video and Disney+ remains a headwind.

(You can read the full research report on Netflix here >>>)

Salesforce’s shares have outperformed the Zacks Computer – Software industry over the past year (+58.7% vs. +21.3%). The Zacks analyst believes that the company’s sustained focus on aligning products with customer needs is driving growth. Continued deal wins in the international market are another growth driver. Salesforce’s strategy of continuous expansion of generative AI offerings are also helping it to tap the growing opportunities in the space.

Yet, stiff competition and unfavorable currency fluctuations are concerns. Softening IT spending amid ongoing macroeconomic uncertainties might hurt its growth prospects.

(You can read the full research report on Salesforce here >>>)

Shares of Cisco have outperformed the Zacks Computer - Networking industry over the last six months (+20.4% vs. +19.2%). Per the Zacks analyst, the launch of AI-powered Hypershield, which combines security and networking, has strengthened the company’s security portfolio. Also, its business model has evolved with subscription revenues accounting for more than half of total revenues.

Yet, Cisco has been suffering from sluggish networking sales as well as stiff competition. Its prospects are further challenged in the AI-driven networking space due to stiffening competition aggravated by Hewlett Packard’s deal to acquire Juniper.

(You can read the full research report on Cisco here >>>)

BK Technologies’ shares have outperformed the Zack Wireless Equipment industry over the past year (+119.5% vs. +52.3%). The Zacks analyst believes that the growing demand for BKR 9000 and BKR 5000 radios have supported revenue growth. Also, a large order backlog and focus on innovation, such as the patented InteropONE solution, strengthens BK's market position.

However, reliance on government contracts, supply-chain risks and limited product diversification pose potential challenges.

(You can read the full research report on BK Technologies here >>>)

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Zacks Investment Research

Monday, August 19, 2024

The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features new research reports on 16 major stocks, including Broadcom Inc. , Bank of America Corporation and Netflix, Inc. , as well as two micro-cap stocks BK Technologies Corporation and Optex Systems Holdings, Inc . The Zacks microcap research is unique as our research content on these small and under-the-radar companies is the only research of its type in the country.

These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.

You can see all of today’s research reports here >>>

Broadcom shares have outperformed the Zacks Electronics - Semiconductors industry over the year-to-date period (+49.6% vs. +25.4%). The company’s fiscal second quarter benefited from strong deployment of AI by hyperscalers, service providers and enterprises. Networking remained strong as the company witnessed strong growth.

Sales of the PAM-5 and Jericho 3, which Broadcom deployed successfully in close collaboration with partners like Arista Networks, Dell, Juniper, and Supermicro, doubled year over year. It also doubled shipments of PCI Express switches and NICs in the AI backend fabric.

AI sales surged an astounding 280% year over year and is now expected to be more than $11 billion for fiscal 2024. Broadcom expects networking revenues to be strong. Server storage connectivity revenues are expected to recover modestly in the second half of 2024.

(You can read the full research report on Broadcom here >>>)

Shares of Bank of America have outperformed the Zacks Banks - Major Regional industry over the past six months (+17.4% vs. +17.2%). The company’s second-quarter 2024 results were aided by marginally higher revenues. While high funding costs are a concern, the company’s net interest income (NII) will be positively impacted by the current high-rate regime. The Zacks analyst project NII to witness a CAGR of 0.8% by 2026.

Bank of America’s plans to open financial centers in new and existing markets and improve digital capabilities will aid the top line. While the capital markets activity is showing signs of improvement, the challenging macroeconomic environment might weigh on the investment banking (IB) business.

Thus, fee income growth will likely be muted. We project fee income to rise in 2024 and decline in 2025. Due to continued investments in franchise, operating costs will remain high. We expect expenses to rise 0.5% in 2024.

(You can read the full research report on Bank of America here >>>)

Netflix shares have outperformed the Zacks Broadcast Radio and Television industry over the year-to-date period (+38.4% vs. +18.2%). The company is benefiting from its growing subscriber base, thanks to a robust portfolio, paid subscription-sharing offering (part of its password-sharing crackdown), recent price changes and the strength of its business in general.

Netflix added 8.05 million paid subscribers globally in second-quarter 2024, with a rise of 1% in average revenue per subscription. Netflix is expected to continue dominating the streaming space, courtesy of its diversified content portfolio, which is attributable to heavy investments in the production and distribution of localized and foreign-language content.

However, stiff competition in the streaming space from the likes of Apple, Amazon Prime Video and Disney+ is a headwind. NFLX’s leveraged balance sheet and a higher streaming obligation are concerns.

(You can read the full research report on Netflix here >>>)

Shares of BK Technologies have outperformed the Zacks Wireless Equipment industry over the year-to-date period (+44.5% vs. +25.6%). This microcap company with market capitalization of $62.50 million has achieved a significant turnaround in profitability, with second-quarter 2024 GAAP earnings per share (EPS) reaching $0.47, driven by cost reductions and a robust gross margin of 37.3%.

Growing demand for BKR 9000 and BKR 5000 radios, evidenced by orders from the California Department of Forestry and Fire Protection (CAL FIRE) and the Mississippi Forestry Commission, supports revenue growth. A $27 million order backlog enhances revenue visibility while transitioning to outsourced manufacturing reduces costs. A focus on innovation, such as the patented InteropONE solution, strengthens BK's market position.

Yet, reliance on government contracts, supply-chain risks and limited product diversification pose potential challenges. The strong balance sheet, with $2.9 million in cash and no long-term debt, provides financial stability.

(You can read the full research report on BK Technologies here >>>)

Optex Systems’ shares have outperformed the Zacks Aerospace - Defense Equipment industry over the year-to-date period (+23.3% vs. +18.3%). This microcap company with market capitalization of $55.54 million has demonstrated strong growth with a notable revenue increase from $17.6 million to $24.6 million for the first nine months of 2024.

Optex Systems’ expanding order backlog, rising from $43.5 million to over $47 million, underscores robust market demand and solid contract acquisition. Strategic contract wins, including multi-million dollar deals in military applications, bolster its positioning in the defense sector, where it aligns well with the growing demand for optical sighting systems and assemblies.

Financially, it has seen a significant rise in net income, jumping from $0.8 million to $2.8 million, reflecting operational efficiencies and effective management. The company's focus on innovation further strengthens its market position. However, risks include margin compression due to inflationary pressures, contract concentration and competition from larger defense contractors.

(You can read the full research report on Optec Systems here >>>)

Other noteworthy reports we are featuring today include Alibaba Group Holding Limited , Citizens Financial Group, Inc. and Tetra Tech, Inc. .

Director of Research

Sheraz Mian

Note: Sheraz Mian heads the Zacks Equity Research department and is a well-regarded expert of aggregate earnings. He is frequently quoted in the print and electronic media and publishes the weekly Earnings Trends and Earnings Preview reports. If you want an email notification each time Sheraz publishes a new article, please click here>>>

Today's Must Read

Strong Demand for Networking Products Aids Broadcom

High Rates Aid Bank of America Amid Market Volatility

Robust Content Aids Netflix Amid Stiff Competition

Featured Reports

International Commerce & Cloud Businesses Aid Alibaba

Per the Zacks analyst, Alibaba is gaining from International retail and wholesale business strength, driven by AliExpress and value-added services. Solid uptake of public cloud products is a plus.

Efficiency Initiatives Support Citizens Amid High Cost

Per the Zacks analyst, rising loan and deposit balances along with a focus on efficiency initiatives are likely to aid Citizens' financials. However, the escalating expense is a concern.

GSG Segment to Benefit Tetra Tech Amid Forex Woes

Per the Zacks analyst, solid traction of Tetra Tech's Government Services Group Segment, led by higher advanced water treatment work should drive its growth. Forex woes are an added concern.

Diversified Product Mix Aids AutoNation , High Debt Ails

Per the Zacks analyst, AutoNation's diversified product mix and multiple streams of income augur well for earnings and sales growth. However, the high debt level remains a concern.

First American Rides on Acquisitions, Debt Level Hurt

Per the Zacks analyst, a number of buyouts have helped First American to boost its core business, expand valuation and data business. However, increased debt raises financial risk.

Denali Pipeline Progress Good, Targeted Market Tough

Per the Zacks analyst, Denali's pipeline of targeted therapeutic candidates for neurodegenerative diseases is promising. Strategic collaborations bode well but the targeted market is challenging.

USA Compression to Gain from Strong Gas Demand

The Zacks analyst believes that USA Compression Partners' equipment is essential for natural gas pipelines, contributing to stable future cash flows. However, high debt levels remain a concern.

New Upgrades

Digitization Holds Key to BJ's Wholesale Sales Growth

Per the Zacks analyst, BJ's Wholesale Club has been investing in enhancing digital capabilities to better engage with members. Digitally-enabled sales rose 21% in the first quarter of fiscal 2024.

Built to Order Model & Improved Demand Aid KB Home

Per the Zacks analyst, KB Home is aiding from its Built to Order model, improved demand conditions, and lower cancellation rate. Also, solid pricing strategy and affordability initiatives bode well.

Investments & Customer Additions Aid UGI Corporation

Per the Zacks analyst, UGI's strategic investment plans help to upgrade and replace the aging infrastructure that boost its performance. The company also gains from an expanding customer base.

New Downgrades

Old Dominion's Prospects Hurt by Freight Demand Woes

The Zacks analyst is concerned about the challenging freight environment. The operating ratio (operating expenses as a % of revenues) is high due to revenue weakness.

Slow Recovery, Macroeconomic Volatility Burden Ciena

Per the Zacks analyst, Ciena's performance may be strained by slower recovery of order volumes from service providers addressing inventory corrections, alongside global macroeconomic volatility.

Elevated Cost Trends, Global Risks Worry CVS Health

The Zacks analyst is concerned with CVS Health facing high Medicare utilization trends in areas like in-patient and pharmacy, and Medicaid cost pressures. Volatile global issues can hurt operations.

Zacks Investment Research

BK Technologies Corporation BKTI reported adjusted earnings per share (EPS) of 55 cents in the second quarter of 2024 against the year-ago period’s adjusted loss per share of 25 cents.

GAAP EPS for the quarter was 47 cents against the year-ago period’s loss per share of 39 cents.

Revenues in Detail

BK Technologies registered revenues of $20.3 million in the second quarter, up 6.6% year over year.

Per management, the revenue uptick was attributed primarily to the shipments of BKR 9000 radio products and partially due to increased radio accessory sales.

Order Backlog

Order backlog was $26.9 million at the end of Jun 30, 2024, compared with $24 million at the end of Jun 30, 2023. This reflected the growing market demand for the company’s products.

CalFire recorded a purchase order totaling more than $15 million for BKR5000, KNG mobiles and a first purchase of BKR9000 multiband radios as part of their on-going product life-cycle replacement program.

Per management, demand for BK Technologies’ BKR 9000 continued to increase, as evidenced by a $1.1 million order in the second quarter from the Mississippi Forestry Commission.

BK Technologies Corporation Price, Consensus and EPS Surprise

BK Technologies Corporation price-consensus-eps-surprise-chart | BK Technologies Corporation Quote

BK Technologies Gross Margin

In the quarter under review, BK Technologies’ gross profit margin was 37.3% compared with 27.4% in the year-ago period. This reflects the favorable impact of production cost-reduction initiatives implemented throughout 2023 and 2024.

Operating Expenses Analysis

Selling, general and administrative expenses declined 7.8% to $5.5 million.

Profitability

Operating income totaled $2 million against the year-ago period’s operating loss of $0.8 million.

In the second quarter, BK Technologies’ net income was $1.7 million against the year-ago period’s net loss of $1.3 million.

Adjusted EBITDA in the reported quarter was a profit of $2.5 million against the year-ago period’s loss of $0.8 million.

Liquidity & Debt Management

BK Technologies exited second-quarter 2024 with cash and cash equivalents of $2.9 million compared with $3.3 million at the first-quarter end.

Cumulative net cash provided by operating activities at the end of second-quarter 2024 was $2.9 million compared with $1.5 million a year ago.

Guidance

Management has initiated its outlook for 2024 adjusted EPS.

For 2024, the adjusted EPS is expected to be $1.77.

Our Take

BK Technologies exited the second quarter of 2024 with encouraging top-line and bottom-line results. Robust purchase orders for products were also promising. The gross operating margin expansion during the reported quarter bodes well. The receipt of a patent by the company during the quarter also raises our optimism.

Zacks Investment Research

BK Technologies just reported results for the second quarter of 2024.

• BK Technologies reported earnings per share of 55 cents.
• The company reported revenue of $20.25 million.

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