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Converge Technology’s (TSE:CTS) Q4-2022 Earnings Easily Beat Expectations

Story Highlights

Earlier today, CTS reported its Q4-2022 and full-year financial results, which beat expectations. Further, analysts expect high upside potential from the stock in the next 12 months.

After market close today, Converge Technology Solutions (TSE:CTS), a Canadian Hybrid IT infrastructure company, reported its Q4-2022 and full-year earnings results. Converge’s results beat both earnings-per-share (EPS) and revenue expectations, and the company continues to grow rapidly.

Converge Technology’s net revenue rose to C$771.6 million (a 53% year-over-year increase), which missed expectations of C$767.4 million. Interestingly, its gross profits increased by 46%, slower than revenue growth, implying lower margins compared to the prior year.

Additionally, its adjusted earnings per share were C$0.16, greater than the C$0.10 consensus estimate and 33% higher than the C$0.12 from last year. Also, the company’s adjusted EBITDA rose by 24% year-over-year to C$34.7 million. Regarding adjusted free cash flow for the quarter, it came out to C$36.67 million compared to C$29 million in the same period last year.

On a full-year basis, net revenue was C$2.52 billion, 64.7% higher year-over-year. Also, the company’s gross revenue experienced an organic growth rate of 8.6%, highlighting that CTS mainly grows through acquisitions. Lastly, full-year adjusted EPS came in at C$0.50, 42.85% higher than FY2021.

Is CTS a Good Stock to Buy, According to Analysts?

Analysts are very optimistic about Converge Technology. CTS stock earns a Strong Buy consensus rating based on seven unanimous Buy ratings assigned in the past three months. The average CTS stock forecast of C$8.42 implies 103.4% upside potential.


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