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Etherstack (ASX:ESK) share price falls despite solid guidance

The Etherstack share price is falling lower despite the company releasing an upbeat business update regarding its FY2021 guidance.
The post Etherstack (ASX:ESK) share price falls despite solid guidance appeared first on The Motley Fool Australia. –

asx share price fall represented by man shrugging in disbelief

The Etherstack PLC (ASX: ESK) share price is down nearly 3% in early morning trading, despite the company releasing a business update advising it expects FY21 results to significantly outperform FY2020. 

At the time of writing, the Etherstack share price is trading at 68 cents, down 2 cents from yesterday’s closing price.

Major contract wins in 2020

The wireless communications provider says it has had significant success winning major client contracts in 2020.

Three major contracts were won this year, including the delivery of its first major digital radio network to the Royal Canadian Mounted Police.

The company also entered into a Global Teaming Agreement with Samsung Electronics, and signed a $4.1 million deal with the Australian Department of Defence. 

Furthermore, Etherstack reported that its recurring revenue will continue to grow, driven by both long-term support contracts and royalty payments derived from technology licensing. 

The company also advised that, due to continued reduction in long-term debt through repayments and convertible note conversions, it has significantly reduced interest costs this year.  

Quick take on Etherstack

Etherstack develops and licenses wireless technologies to other equipment vendors, as well as designs, manufactures and delivers its own innovative digital radio products.

The company was founded and is based in Sydney, but is twice as large offshore than onshore. It first listed on the ASX in 2012.

Etherstack has a global footprint, having won major contracts overseas including direct engagements with multiple NATO member governments. 

The company’s business is highly leveraged to government and infrastructure spend, which flows to areas such as public safety, utilities, defence and resource projects.

About the Etherstack share price

The Etherstack share price has been volatile over the past year. It reached an all-time high of $3.70 in July 2020, while its 52-week low of 12 cents occurred only around six weeks earlier.

The $3.70 price level was achieved after the company announced the contract with Samsung.

The Etherstack share price has gained 240% in 2020 and, at its current levels, the company’s market capitalisation stands around $84 million.

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Motley Fool contributor Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Etherstack (ASX:ESK) share price falls despite solid guidance appeared first on The Motley Fool Australia.

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