What happened
Shares of Sierra Wireless Inc. (SWIR) jumped 22.3% in 2017, according to data from S&P Global Market Intelligence, thanks to a series of strong quarterly reports.
The first big move of the year came in the form of a nearly 30% single-day pop in February after Sierra Wireless announced significantly better-than-expected fourth-quarter 2016 results. In particular, after a disappointing 2016 from its core OEM solutions segment -- which provides a variety of wireless modules to key original electronics manufacturers -- normalizing demand from both existing customers and new programs helped the company swing back to profitability and top-line growth. That left it well positioned to sustain its momentum into 2017.
IMAGE SOURCE: SIERRA WIRELESS.
So what
But Sierra Wireless' rise last year wasn't entirely stress-free for investors. Shares pulled back in March as some analysts on Wall Street began to fret over its meteoric rise, only to soar once again when the company delivered an equally strong first-quarter 2017 report in early May.
Things got even more interesting, however, in August, when another solid quarterly report was overshadowed by Sierra Wireless announcing its $107 million stock-for-stock acquisition of managed enterprise solutions specialist Numerex (NASDAQ: NMRX). That's all well and good, but keep in mind that Sierra Wireless' market capitalization stood at just $950 million at the time, which meant Numerex investors would own around 10% of Sierra Wireless' total shares following the deal's close.
Combining that impending dilution with a conservative third-quarter earnings outlook was enough to bring out profit-takers. Shares of Sierra Wireless fell around 25% in August as a result.
Now what
With the acquisition of Numerex now complete, Sierra Wireless looks forward to leveraging the company's solutions to accelerate its progress in the thriving device-to-cloud market. Some analysts have also stepped out to argue that the pullback is an attractive buying opportunity -- a sentiment with which I wholeheartedly agree.
We should receive our next update on Sierra Wireless' progress when fourth-quarter 2017 results are released in early February. In the meantime, with shares up nicely over the past year but still well off their 52-week highs, I think patient investors would do well to open or add to their positions.
