Why This Beaten-Down Stock Is Worth A Closer Look [Extreme Networks, Inc, Ericsson (ADR), Tech Data Corp]

The company has some core clients. Its top four clients, which account for at least 10% of the company’s revenue, include Westcon Group, Inc.; ScanSource, Inc. (NASDAQ:SCSC); Ericsson (NASDAQ:ERIC); and Tech Data Corporation (NASDAQ:TECD).

Extreme Networks is a global company with more than 60% of its revenue coming from outside of the United States in such places as Europe, Asia, Canada, Mexico, Central America, and South America.

For the stock to be a good investment opportunity, it needs to convince investors that it can strengthen its growth. Revenues declined for two straight years, but are expected to rise 71.4% to $513.98 million in FY14, and 21.0% to $622.13 million in FY15, according to Thomson Financial. The stock would be a good investment opportunity if these numbers pan out.

The company is also starting to see some earnings growth, with estimated earnings of $0.25 per diluted share in FY14, and $0.39 per diluted share in FY15, according to Thomson Financial.

Valuation-wise, the stock trades at an attractive 10.95 times (X) its estimated FY15 earnings and has a price-to-earnings growth (PEG) ratio of 1.18 based on an estimated five-year compound annual growth rate of 15.0%.

In my view, the stock could surge if it delivers or shows evidence that the worst is over for this stock.

This article is brought to you courtesy of George Leong from Profit Confidential.

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