Rising capital expenditure figures show corporations are comfortable enough with the state of the economy and their business, that they are able to upgrade parts of the business. One such area that often comes up first in corporate offices is upgrading communication and network devices. These aspects are important to keep current and upgraded because your business is only efficient with effective communication and backed by a solid network that is safe and stable.
One such company that should benefit from companies upgrading their communication infrastructure is Black Box Corporation (NASDAQ: BBOX). Black Box is an integrator of communication systems throughout the world. The company offers a wide variety of wired and wireless communication services, voice communication services, and provides its services across all industries.
The fundamental picture shows Black Box is at a market cap of $433.02 million and currently has a "hold" rating from analysts. Price to earnings is at 15.60 and forward price to earnings is at 12.01. Price earnings growth is at 1.56, price to sales is undervalued at .44, price to book is also undervalued at .89, price to cash is at 16.16, and price to free cash flow shows up at 8.86. Black Box has a total debt to equity of .36, and has cash per share of $1.33. This gives the company a decent current ratio of 2. Earnings are expected to rise 112.4 percent this year, 10.24 percent next year, and 10 percent over the next five years. Margins are beginning to show signs of life with a gross margin of 32 percent, operating margin of 6.6 percent, and profit margin of 2.9 percent. Black Box pays an annual dividend of 1.33 percent.
Overall, Black Box has some attractive fundamentals, especially this late in a bull market. The stock is trading below book value and is poised to make continued earnings growth over the next several years. A 1.33 percent dividend may not be the greatest yield out there, but a yield nonetheless. Institutions own over 97 percent of Black Box's shares. This is significant because it shows that this small-cap has caught the attention of Wall Street and could help provide support to future uptrends. To be sure the risk to Black Box's future success is financial uncertainty and/or an economic decline. Capital expenditures are economically sensitive and with a December taper decision potentially looming, corporations could likely put off upgrades until the New Year. Black Box should be viewed with caution along with the U.S. economy. Overall, I think the long-term looks bright for this emerging growth name.