We came across a bullish thesis on IDT Corporation (NYSE:IDT) on Substack by LittleBarnSparrow. In this article, we will summarize the bulls’ thesis on IDT. IDT Corporation (NYSE:IDT)’s share was trading at $46.87 as of Jan 6th. IDT’s trailing P/E was 16.05 according to Yahoo Finance.
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IDT Corporation, a diversified holding company, has emerged as a compelling investment opportunity, balancing legacy businesses with high-growth segments. Its portfolio includes three stagnating or declining legacy businesses and three rapidly expanding ventures with significant addressable markets. Recent results underscore IDT’s strong operational performance, robust balance sheet, and strategic investments aimed at amplifying profitability through operating leverage. This positions IDT as a well-rounded company with promising near- and long-term growth prospects.
The standout performer, National Retail Solutions (NRS), specializes in providing Point-of-Sale (PoS) systems and associated recurring services to small retailers. In the latest quarter, NRS reported a 26.5% revenue increase, with recurring revenues up 29%, driven by improved ARPU and expanding profitability margins. Despite cyclicality in advertising revenue, the company has strategically diversified its revenue streams, now relying more on payment processing and software solutions, which offer higher-quality, non-cyclical growth. NRS is actively broadening its total addressable market by targeting verticals like small restaurants, hotels, and gas stations. With adjusted EBITDA margins now at 25% and a trajectory toward $135 million in revenues by 2025, NRS is on track to deliver approximately $35 million in EBITDA, making it a cornerstone of IDT’s growth story.
The Fintech segment, led by BOSS Money, IDT’s money remittance business, has shown exceptional performance, with revenues surging 45% year-over-year. Management is prioritizing margin improvement, with adjusted EBITDA jumping to $4 million this quarter. Investments in working capital, particularly for disbursement funding, highlight a strategic commitment to sustaining strong growth in this high-potential area, supported by IDT’s cash-rich position—a distinct competitive edge in a working capital-intensive industry.
Net2Phone, IDT’s cloud communications segment, reported 13% revenue growth despite currency headwinds, with ARPU improvements in premium services like Communication Center as a Service. While its performance is less dynamic than NRS or BOSS Money, it remains a steady contributor with strong growth prospects.
Legacy businesses, which still account for a significant portion of revenue, provide a stable financial foundation, even as they lose share to the rapidly growing segments. With management’s focus on building NRS into a multi-billion-dollar enterprise and leveraging the momentum of BOSS Money, IDT appears poised for substantial value creation. Despite the CEO’s understated communication style, the company’s consistent results and strategic direction inspire confidence. At its current valuation, IDT offers a compelling investment case with significant upside potential fueled by its high-growth segments and operational excellence.
IDT Corporation (NYSE:IDT) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 14 hedge fund portfolios held IDT at the end of the third quarter which was 15 in the previous quarter. While we acknowledge the risk and potential of IDT as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than IDT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.