Black Box's Shares Popped: What You Need to Know
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of network installation specialist Black Box (NAS: BBOX) gave us some clarity today, rising as much as 12.5% on triple its (admittedly anemic) average volume.
So what: Last night's second-quarter report showed record sales and an optimistic third-quarter forecast, which was enough to overcome a somewhat disappointing earnings performance. Separately, the company also won a contract to deploy a ShoreTel (NAS: SHOR) communications network at the new Marlins baseball stadium in Miami.
Now what: Government sales were a bit slow but Black Box easily made up for that shortfall elsewhere. The company installs and helps customers manage a plethora of communications solutions, including voice, video, and unified communications products from industry giants Cisco Systems (NAS: CSCO) , Polycom (NAS: PLCM) , and Avaya. Not every telecom, large public facility, or enterprise campus wants to perform these services on their own, and Black Box wants to earn its name -- all you see is a working system, without worrying too much about what goes on inside.
Before I start to sound like a Black Box infomercial, let me point out that gross margins are getting thinner and long-term sales growth is modest at best. Black Box performs a welcome service in a large market, but has some work to do before becoming all that it could be.
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At the time this article was published Fool contributor Anders Bylund holds no position in any of the companies mentioned. The Motley Fool owns shares of Cisco Systems. The Fool owns shares of and has created a bull call spread position on Cisco Systems. Motley Fool newsletter services have recommended buying shares of Polycom and Cisco Systems. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinion, but we all believe that considering a diverse range of insights makes us better investors. Check out Anders' holdings and bio, or follow him on Twitter and Google+. We have a disclosure policy.
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