Opinions
Jim Cramer - Mad Money
Cerence
CRNC-Q
COMMENT
Jun 21, 2021
Stock price when the opinion was issued
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CRNC had a very strong recent quarter, with EPS nearly double estimates. Sales were 4% better than expected. EBITDA was 48% better. It is up 200% in a year and trades at 44X earnings. Certainly stock and fundamental momentum is very solid here. Net debt is a bit high at 3X cash flow, and its small size adds risks. EPS is also expected to dip this year from very strong recent numbers. Insiders own 9% and have been buyers this year. The 2025 forecast did beat estimates. It has some good partnerships with companies such as ARM. The sector is also poised for growth, as noted with some regulatory help. It looks good for a small cap, though is pricey and due to its size risk we would size a position accordingly.
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The world leader in car voice and A.I. that connects to third-party apps, like Starbucks, in 325 million cars worldwide, including 50% of every car sold in 2020. Shares have had a huge run, from $15 to $111 after Nuance spun it off two years ago. Yet, shares are down $20 from this year's highs.