For years, savvy market investors have found success by taking advantage of an investment philosophy that believes that markets are seldom efficient when pricing emerging, company-specific opportunities. Often, these same investors earn high returns by taking advantage of investments in undervalued companies that are performing well beyond market competitors. FTE Networks (NYSE: FTNW) is one of these companies, setting itself apart from peers by building a respectable presence in the emerging sector of large-building infrastructure design and replacement. And, 2018 is setting up exceptionally well for FTNW investors.
Closing at $19 a share last Friday, FTNW shares retreated from its March high levels of $25.44. But, when taking into account the recent news that the company has published, investors can look at current price levels more as an opportunity than a ceiling. In fact, during just the past month, FTNW has announced several new and significant contracts amounting to approximately $24.3 million and increases the year-to-date contract awards to roughly $133 million. Yet, the market has not been generous to FTNW in recognizing the value of these accretive deals. Thus, while FTNW is not immune from the roller coaster ride of triple-digit market swings, the company sits well positioned to continue its trend to higher highs and to potentially decouple from an overall market that is looking for consistent direction.
For FTNW, though, share price appreciation may not depend on the overall markets, and with the company securing lucrative contract awards within their multi-billion dollar market, the chances are high that FTNW can outperform a market where company accomplishment will outweigh sector sentiment.
FTNW Starts Q2 Strong With $24.3 Million Deal
On April 11th, FTNW announced that they won new projects totaling $24.3 million, which boosts its year-to-date total of new awards to roughly $133 million. For investors looking for value opportunity, these most recent contracts are expected to have a positive impact on earnings, making the current pullback a compelling reason to consider taking or increasing stock positions at these levels.
Targeting and taking aim at the strategic opportunity, the FTNW project portfolio includes servicing companies in the communications, technology, REIT, and hedge fund industries. The opportunities often provide FTNW with re-occurring infrastructure projects in strategic markets throughout the United States, many with master services agreements included. Clients in the space look to FTNW to enable the creation of intelligent workplaces by providing state-of-the-art technology, infrastructure, and fit-out services, building out marquee customers in the New York City metro region that is proving to strengthen FTNW’s market presence and position as an emerging and leading provider of smart-building infrastructure.
New Contracts Add To The $434 Million FTNW Backlog
In April, FTE Networks announced additional and substantial contracts awarded to the company. FTNW President and CEO Michael Palleschi commented on the developments by stating, “Year-to-date, FTE has continued to secure new contract awards from an increasingly prestigious client base, including global, tier one clients, Fortune 100/500 companies and top-ranking REITs.Our recently announced preliminary backlog of approximately $434 million at December 31, 2017, underscores the underlying strength of our business and further validates the market’s adoption of FTE’s product and service suite that spans multiple growth market segments. By offering our complementary services that provide state-of-the-art technology and infrastructure solutions that enable the edge, we are well positioned to meet the increasing demands for intelligent work spaces.”
For investors that missed the first leg of the share price run, an opportunity presents itself again. Founded in 2017, FTE Networks has been active in building shareholder value through strategic business opportunities that use proprietary technology that can fit and advance both large and small scale infrastructure development. From a competitive perspective, FTNW is well positioned to design and implement client specific demands and deliver scalable solutions targeted toward the IT and telecommunications industries. The significant value-added feature that FTNW provides its customers is their ability to provide latency reduced, end-to-end solutions that enable their clients to connect with their customers, engaging cutting-edge technology in facilitating a fast, secure, and reliable connection for digital content.
Reaching For A Trillion-Dollar Opportunity
Generating substantial revenue increases from an IP secured technological platform, FTNW is perpetuating its growth from the company’s expertise to provide specialized service in segmented industries that include commercial construction, data-center buildout, network infrastructure and fiber installation, developing globally positioned smart-buildings, and in-building wireless technology. At last forecast, these five targeted markets are expected to offer an estimated $576 billion market and revenue opportunity by the turn of the decade. And, with FTNW continuing its momentum of building its client and revenue-generating base, it’s likely that the strengthening market position of FTNW, combined with recent strategic acquisitions, will lead to enormous opportunities to generate high-dollar, recurring revenue streams from each of these segmented markets in both the near and long-term.
Investors can also expect accretive benefits from Crosslayer, FTNW’s single integrated communications platform that can provide business owners with an ultra-fast and reliable network for their building or campus. Crosslayer is fueled with the most advanced solutions in networking technology and offers a unique ability to eliminate redundancy problems that curtail many of the dated networks installed by competitors. From a market and competitive perspective, CrossLayer’s platform is built upon some of the most notable breakthroughs in networking technology, delivering appreciably faster speeds at a much lower cost – highlighted by the ability to offer 1G of service for the same price as a typical 20MB connection.
April’s New Contract News Deserves Valuation Respect
The most recent announcement in April of new contracts certainly deserves more respect. In fact, while the $24.3 million increase is significant, it also adds to the already reported $36 million deal announced in March. During March, news of the new contracts sent the share price soaring, increasing by more than 5% on the story. Importantly, investors must note that these new awards only add to an already impressive revenue stream.
During 2017, FTE Networks generated roughly $177.9 million in revenues, setting the stage for an even more significant year for revenue growth and market penetration. In 2018, investors may expect the trend of lucrative contracts to continue, significantly bolstered by recent acquisitions and newly minted agreements. However, what is critically important to recognize is that FTNW offers a unique service, and with the necessity of re-fitting large buildings with “smart-building” capability, FTNW is likely to attract attention from a market starving for infrastructure and technology-driven updates.
A Smart Future For FTNW
Seeing a significant spike from it’s roughly $6.50 levels of just over six months ago, the current share price of $19.00 still offers investors with considerable upside potential. Based on the last three months alone, FTNW is building value through contracts that will deliver substantial revenue increases, include recurring revenue streams, and quickly serve to establish FTNW as a reliable and proven vendor to build-out specialized client services in a sector that is in its relative infancy.
Now that FTNW has pulled back from its recent highs of more than $25.00 per share, investors should pay close attention to the value-opportunity currently provided from a considered investment into FTE Networks. No doubt, FTNW sits positioned for a promising year and if the first quarter provided a clue as to the momentum getting generated at the company, the remainder of 2018 may set up to be the most substantial revenue-generating year in FTNW’s history, making current prices significantly undervalued and ripe for significant increases.