Perion Network Limited

Stock: PERI

Rating: Buy

Author: Waleed M. Tariq

Overview

  • Digital advertising company Perion Network is established in Israel.
  • Display Advertising and Search Advertising make up approximately half of the company’s income for the nine months ended September 30, 2021.
  • Perion’s “Smart Optimization of Responsive Traits” (SORT) technology and Vidazoo video monetization platform provide it a competitive edge.

Bullish

  • Perion Network is a leader in the AdTech industry, exceeding analyst estimates in recent quarters.
  • The latest share offering will add to PERI’s debt-free balance sheet liquidity.
  • I’m bullish on Perion’s stock because of its good financial performance and underlying strength, which I expect to continue.

Bearish

  • I am purely bullish on the stock considering Perion has no major obstacles of not all.

Financial success

  • Perion’s industry-beating financial performance this quarter continues on its robust growth trajectory.
  • The company has outperformed analyst predictions in the last 4 quarters, resulting in a 60% year-to-date share price growth, reaching 100% YTD. Consistent bottom-line growth manages costs.
  • The estimates may appear high, but they’re justified by the company’s past and expected success.
Source: Perion
  • The company’s improving operational performance is shown by its above-average ROE and ROA.
MetricPerion NetworkIndustry Median
ROE13.14%4.04%
ROA07.74%1.40%

Industry-beating growth

  • Perion’s performance metrics dwarf industry averages.
  • The company’s revenue has a CAGR of 34% from 2020 to 2022, whereas the ad tech industry’s is 15.6%.
  • Perion predicts $1 billion in sales by 2025 with a 25% CAGR, while digital advertising is expected to grow 11.8%. Both corporations outpace their industries.
Source: Perion

Solvency & liquidity

  • The corporation has a robust balance sheet.
  • Solvent and debt-free. Its low capital lease-to-equity ratio, high cash-to-debt ratio, and high interest coverage free up $156 million for R&D and acquisitions.
  • The company’s recent stock offering raised $180 million for operating capital, business growth, mergers, and other corporate goals.

SORT Technology

  • Perion just launched SORT, a cookieless tracking solution after 2 years of work.
  • The technology proved SORT can outperform cookie-based targeting.

Conclusion

  • The company’s outstanding financial performance and underlying health support my bullish stance on the stock. Before the upsides are priced in, investors can buy.