If you want to invest overseas, sometimes you have to look in the lonely, largely untouched corners. Take Partner Communications (NASDAQ:PTNR), one of Israel's largest telecommunications firms; it's virtually ignored by U.S. analysts.
There are other Israeli companies out there -- TevaPharmaceuticals (NASDAQ:TEVA) and NICE Systems (NASDAQ:NICE) both call Israel home -- but since the delisting of cable television provider Matav, Partner looks like one of the only halfway-liquid plays on the actual health and growth of Israel's economy.
I've owned Partner in the past (profitably, I'm happy to say) and this stock has seen its share of ups and downs. Though a change in tariff policies certainly stirred the pot, Partner seems to getting back on the road to growth.
Revenue was up more than 5% this quarter in local currency terms, and earnings per share once again rose year over year. Looking at other relevant numbers, net income growth clocked in at 29%, while EBITDA rose almost 10%. It's also worth noting that the company is paying out a pretty respectable dividend.
Other operating statistics were a bit mixed. Churn increased slightly to 4.2%, a none-too-alarming figure. Subscriber growth nearly reached 8%, and market share stayed at just under one-third. While usage climbed 4.5% in the quarter, ARPU fell more than 3%, due in part to those tariff/rate changes.
I've been fairly impressed with how the company has navigated the tariff changes. Partner seems to have really gotten a hand on cost controls, and it sounds like its margins should be sustainable.
I don't know whether Berkshire Hathaway's (NYSE:BRK-A) purchase of a private Israeli company will spark more investor interest in the area. I'd simply suggest the following for investors tempted to scramble for other ideas: The Israeli origin of Berkshire's acquisition was almost certainly far down the purchase's list of relevant factors.
By the same token, valuation here seems to suggest that Partner's at least worth some consideration. Investors should note, though, that Hutchison Whampoa owns a majority stake in the company; they're your true partner here.
Further foreign Foolishness:
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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).
