Sierra Wireless Inc.

Sierra Wireless Inc. (SWIR - Snapshot Report) expects strong contributions from four new product lines, further fueling the company’s expected earnings momentum. After surpassing resistance in late May, SWIR is poised to continue its upward trend.

Full Analysis

Sierra Wireless Inc. provides wireless wide-area modem solutions for mobile computing. It develops and markets a range of products that include wireless modems for mobile computers, embedded modules for original equipment manufacturers and rugged vehicle-mounted modems. The company’s products permit users to access wireless data and voice communications networks using laptop computers, handheld mobile computing devices, vehicle-based systems, or fixed wireless terminals.

On Apr 26, this Zacks #1 Rank stock reported first-quarter earnings of 24 cents per share, up from 10 cents per share in the year-ago period and 12 cents above expectations. Fueling the earnings growth, revenues rose 89% to $85.4 million, also above analysts’ estimates of $82.6 million.

According to CEO Jason Cohenour, "By the end of the quarter, we commenced initial commercial shipments of three new and important products: our 3G MPs for both HSDPA and EV-DO and our new USB modem for HSDPA. We also announced an agreement with Sprint to launch our new EV-DO USB modem for use on the Sprint Mobile Broadband Network. We expect all four of these new products to be important contributors to our financial results in the coming quarters.”

Looking forward, Sierra Wireless forecasted second-quarter earnings of 21 cents per share on revenues of $92 million. The guidance was above analysts’ estimates, who were expecting earnings of 15 cents per share and revenues of $84.4 million.

The latest 100% earnings surprise marked the seventh consecutive quarter Sierra Wireless has exceeded expectations by at least a double-digit percentage. Following the latest earnings release, full-year consensus estimates were increased by 14 cents to 76 cents. Since then, estimates have increased twice, most recently by two cents to 84 cents. Furthermore, Zacks Ranks the company a number one out of 18 companies in the Computer: Peripherial Equipment category.

After climbing over 26% in 2006, roughly double the S&P 500 return over the same period, SWIR has soared 57% year-to-date. The stock is currently trading near three-year highs after surpassing resistance levels that had held for 12 months. SWIR’s strong track record of earnings surprises and upward full-year estimate revisions should support the stock’s momentum for the foreseeable future.