Neutral Tandem, Inc.

Company Description

The Company provides tandem interconnection services principally to competitive carriers, including wireless, wireline, cable telephony and Voice over Internet Protocol, or VoIP, companies.

The services allow companies to share local and long distance traffic throughout their networks.

Net Income Doubles

The Chicago-based company announced first-quarter results on Apr 30 which included a 46% in revenue, up to $38.2 million. Neutral Tandem sited geographic expansion and more minutes carried as the driver of the revenue growth.

As a result, net income came in at $9 million, up 125% from just $4 million in the same period last year. This yielded 27 cents per share, topping the forecast of 23 cents. Neutral Tandem is no stranger to surprises as the young company has 5 consecutive surprises.

A Happy CEO

Rian Wren, President and CEO, said, "We believe that our performance reflects our ability to provide a valuable service to our customers and execute on our strategic growth initiatives."

Estimates Jump

As a result of the release, the consensus estimate for 2009 popped to $1.16, up from just 99 cents. The forecasts for next year are now averaging $1.42, up from $1.24. These projections would result in year-over-year earnings growth of 61% and 23% respectively.

Good Value to Boot

Shares of TNDM are trading hands at about 16.5 times next year's earnings. The stock is also carrying a PEG ratio of just 0.8 compared to the industry average of 1.6.

The Chart

Share of TNDM have sold off sharply as of late, which could create a great entry point, once shares settle down. Take a look below.

Read the full analyst report on TNDM