Sierra Wireless, Inc. (TSX:SW)(NASDAQ:SWIR) has declined more than 18% in just the past month and it is only a few weeks removed from hitting a new 52-week low when the share price barely stayed above $19. However, this is not just a sudden sell-off: Sierra has lost more than 44% of its value in the past 12 months.
Although the stock currently sits in oversold territory, that distinction loses significance for a stock like Sierra that has been on a persistent decline. The real question for investors is whether the stock price has found a bottom, and whether there is enough of a reason to see a recovery from where it is today.
Over the past four years, Sierra has found some steady support around $20. Although it has dipped under for periods of time, generally it has found a good base at that price point.
The latest sell-off in share price was prompted by a disappointing quarterly result that saw Sierra post a poor Q4 where the company finished in the red for the second time in the last four quarters. Although sales were up more than 12% from a year ago, investors were unimpressed with the company’s lack of consistency as Sierra has averaged a tiny profit margin of just half a percentage over the past four quarters.
The stock is trading at only 1.5 times its book value and so it could be a decent value buy for a tech stock that has been growing and that could still have a lot of potential upside left.
