Mitel Networks: Turnaround Has Materialized, More Growth Ahead


  • Mitel has increased revenue and earnings and this is expected to continue.
  • The company is increasing its recurring revenue and looking for acquisitions, which will drive future growth.
  • This has been one of my best picks and I see more strong growth for the stock.

I first wrote about Mitel Networks (NASDAQ:MITL) back in June 2013 when it was trading at $3.60 with a forward PE of 3.8. The stock is now trading at about $10.40, appreciating 189% in only 18 months. My positive outlook for the stock was due to the low valuation and an expected turnaround where the company transitioned from experiencing declining revenue to significantly increasing revenue. Growth for Mitel has come from its Cloud segment, where the company typically earns recurring revenue. The Cloud segment only comprises about 11% of Mitel’s revenue, but the segment is growing revenue at double-digit rates. Most of the growth was attributed to the Aastra acquisition. The Premise segment comprises the other 89% of Mitel’s revenue. However, the Premise segment has a much slower rate of growth. The Premise segment increased revenue by 2%, while the Cloud segment increased revenue by 64% for Q3 2014.

Although the nature of Mitel’s business is behind the scenes, the company supplies key solutions for 2 billion daily business connections in the form of calls, chats and social messages. The company also is responsible for powering 33 million cloud connections daily. Mitel has done a great job of integrating the acquisitions: Aastra, Oaisys, and prairieFyre. These acquisitions have allowed Mitel to grow its business and give the company a bright outlook for the future.

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