CalAmp Corp. (NASDAQ:CAMP) stock has climbed an impressive 33% so far in 2017 as of this writing, easily outpacing the broader Nasdaq index's solid 13% rise. But before you instinctively tap that sell button, I think some perspective is in order.

Let's take a closer look at the state of CalAmp's business today, as well as where the innovative machine-to-machine communications company is headed from here.

CalAmp telematics solutions


Promises, promises

First, note CalAmp was only just barely beating the market leading up to its fiscal fourth-quarter 2017 report in April. But shares popped nearly 14% the day after that release, when CalAmp easily beat Wall Street's expectations for both revenue and earnings growth. More importantly, CalAmp VFO Rick Vitelle promised that the business would "strengthen as the year progresses, driven by growth in MRM telematics product revenues and [...] recurring revenue both domestically and with LoJack Italy."

Regarding the latter, recall that CalAmp acquired vehicle recovery solutions specialist LoJack early last year and wasted little time leveraging its technology to enter several large untapped markets both in the U.S. and overseas.

But speaking more to the overall business -- and as I noted a little over a month ago -- all of CalAmp's gains would have been quickly erased had it not delivered on its promise for strength. Thankfully, the company did just that with its solid fiscal first-quarter 2018 report last week; revenue and adjusted earnings arrived near the high end of CalAmp's financial outlook, driven by a 17% increase in MRM telematics product sales (to the segment's highest level since mid-2015), as well as strong sequential increases in software and subscription revenue. 

Sacrificing profits (with good reason)

But shares of CalAmp initially declined after last week's report when the company offered mixed fiscal second-quarter 2017 guidance. CalAmp told investors to expect current-quarter revenue of $86 million to $91 million, compared to $90.5 million in the same year-ago period and roughly in line with consensus expectations. This may not seem like an encouraging result with much of the revenue guidance range indicating a year-over-year decline as reported. But note the midpoint of CalAmp's range represents roughly 5.6% growth excluding contributions from its satellite segment, which was formally shuttered late last year.

Of course, this was all well and good with that perspective. But CalAmp also guided for fiscal second-quarter adjusted net income per share of $0.23 to $0.29 -- an admittedly disappointing prediction considering investors were expecting a figure near the high end of that range.

However, CalAmp did offer a light at the end of the tunnel. During the subsequent conference call, CFO Rick Vitelle explained that their second-quarter earnings outlook includes "a roughly 10% sequential quarter increase in R&D expense in support of strategic program rollouts with key customers that are expected to contribute to revenue in the coming quarters."

Put another way, CalAmp is forsaking its bottom line in the near term to capitalize on an opportunity to secure the long-term business of key customers. Looking further out to the full fiscal year of 2018, Vitelle reiterated his promise that the business will "strengthen as the year progresses." And this time, he explained, it will be "driven by broad-based growth centered around [CalAmp's] core MRM telematics business, which is expected to reach a record level in Q2."

To be fair, this means investors must continue to take CalAmp management at its word. But even as a general skeptic of perennially optimistic management commentary, I tend to want to give CalAmp the benefit of the doubt considering its word has proven accurate so far. If all goes as planned for the rest of this year, then it seems the best is yet to come for CalAmp and its shareholders.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.