One-glance verdict
Undervalued
$41.20 our estimate vs market $9.92
Wall Street consensus: $14.00 (-66.0% lower than our fair-value estimate)
76% below our estimate, below the bear case
Fundamentals snapshot
RADCOM Ltd.
RDCM · NCM · Communication Services · Telecom Services
Current price
$9.92
52-week range
$9.40 - $16.74
Market cap
$169.20M
Balance sheet
Healthy
1.74x Concerning
Net cash $106.85M. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
2 Risks
3 rewards · 2 risks
- Reward Revenue grew 38.6% last year.
- Reward Returns 6.4% on equity, ahead of 50% of its peers.
- Risk Operating margin compressed from -8.9% to -31.9% over 3 years.
- Risk Insider ownership is only 17.2% (peer median: 22.8%).
What this company does
RADCOM Ltd.
RADCOM Ltd. helps phone companies manage their networks by selling them smart software that makes sure calls and data are clear and fast, especially with new technologies like 5G. Most of their money comes from these software sales directly to phone companies around the world. This is important because as phone networks get more complicated, companies like RADCOM are needed to keep everything running smoothly for us.
How the company got here
RADCOM Ltd. started in 1985 as an internal project within the RAD Group and was officially incorporated in 1991. It went public on the Nasdaq exchange in September 1997. The company's journey has been marked by a consistent focus on providing solutions for telecommunications carriers, evolving from its early days to support the complex demands of modern mobile networks, including a significant pivot to support 5G networks starting in August 2020. RADCOM has also strategically expanded its capabilities through acquisitions, such as the purchase of Continual in May 2023, to enhance its network intelligence offerings.
What it actually does
RADCOM provides sophisticated software that helps telecommunications companies, also known as communication service providers (CSPs), manage and understand their vast and complex networks. Think of it like a highly advanced diagnostic tool for your mobile phone network. Their solutions monitor network performance, identify issues before they impact customers, and help ensure that services like calls and data are running smoothly. This is crucial for CSPs as they upgrade to newer technologies like 5G, which are much more complex to manage.
Network Intelligence Solutions
This is RADCOM's core business, making up the vast majority of its revenue. They offer a suite of products, including RADCOM ACE, RADCOM AIM, RADCOM RAN, and RADCOM NWDAF. These tools provide communication service providers with crucial insights into their network's performance, from the radio access network (RAN) all the way to the core network. Essentially, they help telecom companies see exactly what's happening within their networks in real-time, identify potential problems, and ensure services are delivered reliably to customers. This segment is vital for enabling the smooth operation and advancement of mobile technologies like 5G.
RADCOM NetTalk (Generative AI)
RADCOM also has a smaller, emerging business line focused on Generative AI, called RADCOM NetTalk. While the specifics of this segment are less detailed, it represents the company's exploration into leveraging advanced AI technologies, like those that can create new content or insights, to further enhance its offerings or develop new solutions for the telecommunications industry. This segment is currently a minor part of RADCOM's overall business but indicates a forward-looking approach to integrating cutting-edge AI.
What management is betting on now
RADCOM's management is heavily focused on leveraging artificial intelligence (AI) and machine learning (ML) to drive automation within telecommunications networks. They are emphasizing their AI-native, event-driven assurance capabilities, which aim to move networks from simply reacting to problems to proactively preventing them before customers are affected. A key strategic priority is to deepen relationships with existing customers, win new ones, and continue to innovate in areas like 'agentic AI' – a type of AI that can act autonomously to manage network functions. The company is also committed to disciplined execution and expanding its market share in the automated service assurance space for 5G and beyond, as evidenced by their revenue guidance and focus on recurring revenue models.
Price history
How the share price has moved
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Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2024 Q4
$10.96M
FY2025 Q4
$14.22M
Revenue
$71.49M
Net income
$11.99M
Diluted EPS
0.71
Operating cash flow
$14.61M
Free cash flow
$14.22M
Fetching…
Sources
Revenue
$61.01M
Net income
$6.97M
Diluted EPS
0.43
Operating cash flow
$11.39M
Free cash flow
$10.96M
Fetching…
Sources
Is it cheap or expensive?
Fair value $41.20 vs current price $9.92
Wall Street consensus is the average analyst price target: $14.00 (-66.0% lower than our fair-value estimate).
Our most-likely fair value is $41.20 a share — about 315.3% above today's price of $9.92, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Healthy
Net cash $106.8M - more cash than debt. Interest coverage 1.7x.
Net debt
$-106.85M
Interest coverage
1.74x
RADCOM Ltd.'s profit covers its interest bill about 1.7 times over. which is stronger than most peers shown here and 2 peers sit below 1x, which is the danger zone where profit does not fully cover the interest bill.
Healthy
Worse cushion
Baseline
Better cushion
RDCM
BASELINE
RADCOM Ltd.
Total debt $2.85M Interest coverage 1.74x This is the baseline the peer rows are being compared against.
Total debt $409.68M Interest coverage 0.46x -74% vs RDCM Carries about 3.8x less debt cushion than RDCM.
Total debt $39.98M Interest coverage 64.93x +3,624% vs RDCM Carries about 37.2x more debt cushion than RDCM.
Total debt $5.40M Interest coverage 246.84x +14,057% vs RDCM Carries about 141.6x more debt cushion than RDCM.
Total debt $674.07M Interest coverage 0.91x -48% vs RDCM Carries about 1.9x less debt cushion than RDCM.
What you should know
The case for and against RDCM
3 Rewards
2 Risks
Rewards
-
Revenue grew 38.6% last year.
-
Returns 6.4% on equity, ahead of 50% of its peers.
-
Free cash flow was positive in 7/10 years.
Risks
-
Operating margin compressed from -8.9% to -31.9% over 3 years.
-
Insider ownership is only 17.2% (peer median: 22.8%).
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
23.62x
Forward P/E
21.11x
P/B
1.42x
P/S
2.50x
EV/EBITDA
14.25x
PEG ratio
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Profitability
How much profit each dollar creates
Gross margin
76.6%
Operating margin
-31.9%
Net margin
10.5%
ROE
6.4%
ROA
1.6%
Health
Liquidity and balance-sheet strength
Debt / equity
0.02x
Current ratio
6.20x
Quick ratio
6.17x
Total debt
$2.85M
Total cash
$109.70M
Growth
How the business has been compounding
Revenue TTM
$230.15M
Revenue 5Y CAGR
17.5%
EPS TTM
0.42
EPS 5Y CAGR
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Cash flow
How much cash the business throws off
Operating CF TTM
$36.72M
Free CF TTM
$14.22M
FCF margin
6.2%
Dividend
Shareholder payout
Yield
0.0%
Payout ratio
0.0%
Last ex-div date
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