There seems to be a sea of semi-obscure Israeli tech companies with good technology, healthy financial numbers, and robust growth. Investors willing to dive in might be interested in NICE Systems (NASDAQ:NICE) -- a nicely growing little company with an apparently solid market opportunity.
Growth is accelerating at NICE; the company's third-quarter revenues grew 30% year over year. Enterprise gear remains the dominant component of revenue, but the company's public and security business grew at an above-pace clip of 43%. Margins and earnings were presented according to both GAAP and pro forma calculations, and showed healthy growth in both cases.
The company is also performing well from a cash flow standpoint. Free cash flow has nearly doubled through the first nine months of this year, making up more than 20% of NICE's reported sales. Structural free cash flow, though not quite as impressive, still grew by 50%.
While competitors like Verint (NASDAQ:VRNT) and Witness Systems (NASDAQ:WITS) are certainly in the mix, the overall demand for content analytics technologies and systems should increase enough to benefit every company in the field to some extent. Companies are realizing the potential benefits of increased content analytics, and public entities are under greater pressure to better secure sensitive areas like transportation systems. Given the work still necessary simply to make subways and commuter rails safe, there should be plenty of business for NICE in the years to come.
It's pretty clear to me from NICE's valuation (and its more-than-80% rise in share price in the last 12 months) that the cat is somewhat out of the bag here. Still, institutions appear to own fewer than half the shares at this point, and NICE is hardly a household name yet. What's more, as long as the company can keep earnings and cash flow growth on track, investors could still find it a pleasant opportunity.
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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).
