Yes, the train is leaving the station.Data Communications Management reported it's second quarter results on August 11and there is evidence of a partial recovery.But only a partial recovery as 5 years ago DCM traded at $25-$30 and 3 years ago it traded at $10.So Data Communications has a successful history behind it.That aside DCM stock price has been as low as $.10 in 2020 as the pandemic took it's toll on the DCM stock price.
Second Quarter Highlights
Revenue was actually down in Q2 to $64 million from $70 million in 2019.However this was offset by a higher gross margin- from 23% up to 31%.Consequently adjusted EBITDA was up 203% to $14 million for Q2 and $24 million for the first half.This had a big impact on net income which went from a $4 million loss to a $4 million profit in Q2 and $6 million profit for the first half.This translates into $.14 earnings per share for the first half.This blog forsees e.p.s of .28-$.30 for 2020.A P/E ratio of as low as 3 will send the stock price to the $1.00- $1.25 area. 
More Work to Do
Data Communications Management has a very clean balance sheet.It picked up some small printing operations in 2018 but has cleared down it's debt.It picked up a small telco in 2019 and this has allowed it to raise it's gross margin.But it still only has 43 million shares outstanding.And it even got a government subsidy of $6 million in 2020.However some new shares may have to be raised for it's new potential acquisition of Informetrica.And this blog sees one or two new partners in the near future.It is possible that because of the acquisition price they both may be immediately accretive to net income.But this will not likely make total shares outstanding more than 50 million.And that will not dilute earnings tremenduously.
Changing their Product Mix
5years ago when DCM was trading around $30 it was getting a lot of government printing contracts.Now much of this has dried up but DCM still gets printing contacts and presentations.But in the last 18 months or so it is getting more and more telecom customers.And soon it will get new data analysis work also.The gross margins are higher here.And this makes a nice blend of business.Revenues will not be as high as in the past but net income will continue to grow.DCM will not be at $25 soon but it has started a partial recovery.
Investors should look closely at Q3 results.It needs a good quarter here.A good quarter will put Data Communications on track to hit $.28-$.30 e.p.s for 2020.That will be a good time to buy as DCM heads towards $1.00-$1.25 per share. https://www.fool.com/
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