CUB - Is Cubic a Buy?
Cubic (NYSE: CUB) disappointed investors with its most recent earnings and backlog and its share price has seen a marked decline over the past few weeks. But against a backdrop of better-than-expected earnings for the prior three quarters and a move into potentially more profitable businesses, the sell-off may represent an opportunity for the long-term investor. Recent insider buying shows the company's chief financial officer and two directors may think so, should you as well? Let's take a look at what Cubic has done well, what's it's struggling with, and how it could overcome these challenges to be a buy.
The company is a technology provider operating through three main business segments. The global defense unit provides training for US and allied military forces and law enforcement in more than 35 countries. The mission solutions unit provides communications and other services for defense, intelligence, security and commercial missions. The transportation systems delivers payment and traffic management technology for transportation authorities and agencies and has had some big wins in recent years that are starting to pay off for Cubic.
For example, in 2017 the company was selected by the Massachusetts Bay Transportation Authority (MBTA) to design, build, operate and maintain a new fare payment system, and the contract has started contributing positively to quarterly results.