Cubic Corporation designs, develops, manufactures, and sells mass transit fare collection systems, air and ground combat training systems, and secure communications products for various federal and regional government agencies in the United States and internationally. It operates through three segments: Cubic Transportation Systems (CTS), Cubic Global Defense Services (CGD Services), and Cubic Global Defense Systems (CGD Systems). The CTS segment provides fare collection and revenue management devices, software, systems and multiagency, multimodal integration technologies, and operational services for transportation authorities and operators. It also offers BPO services, such as card and payment media management, central systems and application support, retail network management, passenger call centers, and financial clearing and settlement support services. The CGD Services segment offers support services, including live, virtual, and constructive training; real-world mission rehearsal exercises; professional military education; intelligence support, information technology, information assurance, and related cyber support; military doctrine development; consequence management, infrastructure protection, and force protection; support services for field operations, force deployment and redeployment, and logistics; and services for military and national intelligence communities, as well as for special operations, law enforcement, and homeland security clients. The CGD Systems segment provides military range instrumentation, laser based training, virtual simulation, and game-based synthetic training systems, as well as live-fire range design and maintenance services; and communications products, including data links, power amplifiers, avionics systems, modular networking and baseband communications equipment, and cross domain products to address multi-level security requirements. The company was founded in 1949 and is headquartered in San Diego, California.
(Summary) (Company) (Chart)
10 July 2016
1yr Target $50.17
Payout Ratio 21.77%
1yr Cap Gain 25.58%
1yr Tot Return 26.25%
EPS (ttm) $1.24
EPS next yr $2.38
Forward P/E 16.78
EPS next 5yr 31.47%
1yr Price Support $74.89
Market Cap $1.08 Bil
Revenues $1.45 Bil
Earnings $33.50 Mil
Profit Margin 2.27%
Quick Ratio 1.30
Current Ratio 1.50
1yr RevGR 2.36%
3yr RevGR 0.63%
5yr RevGR 3.61%
1yr EarnGR -67.19%
3yr EarnGR -38.13%
5yr EarnGR -20.64%
1yr DivGR 68.75%
3yr DivGR 18.84%
5yr DivGR 17.60%
Founded by Walter J. Zable, Cubic began as a small electronics company in a San Diego storefront in 1951. The employees' tireless efforts over the next few years laid the foundation for large-scale product diversification and growth. During the 1960s, Cubic grew by 588 percent.
Among Cubic's early successes were the introduction of products such as precision distance measuring equipment, aerial photo mapping and survey systems. The company also developed the nation's first electronic stadium scoreboard in 1966 for San Diego's stadium.
Cubic gained worldwide recognition for its geodetic SECOR satellite surveying system, the first of its kind to produce a direct coast-to-coast measurement of the United States. The solid-state system was introduced in the early 1960s, long before the advent of Global Positioning System (GPS) technology.
By 1968, Cubic had introduced more than 60 products and services generating sales in excess of $28 million. A major contributor to Cubic's profits and growth in the 1960s was the Electrotape Distance Measuring Instrument - the world's first commercial distance surveying system to provide centimeter accuracy from 100 meters to 50 kilometers. It modernized how land surveying was conducted for mapping, subdivisions, land development and engineering construction. The system provided a major cost savings to users.
The Electrotape was followed by the Autotape - the first two-range, high-accuracy positioning system for the petroleum and offshore construction industry. It was used for major pipe-laying and off-shore construction projects throughout the world before the advent of GPS technology. The system revolutionized the oil industry, since it allowed offshore oil exploration without the fear of drilling in the wrong spot.
Cubic became even more profitable with the introduction of the ARGO offshore positioning system, a long-range ship positioning system that was the standard tool for U.S. and Australian hydrographic fleets.
At the same time, Cubic produced precision distance and angle measurement (tracking) systems for aircraft and test missile ranges around the world. These core technologies led to the development of combat training instrumented systems that provided positioning and tracking systems, and data fusion and display.
By 1973, the company leveraged its expertise in data links, data processing and precision tracking of high dynamic targets to create the world's first "Top Gun" ACMI system for the Marine Corps Air Station at Yuma, Arizona. Later, Cubic pioneered the world's first turnkey ground combat instrumentation system at Hohenfels, Germany.
The same technologies were incorporated into Cubic's broadcast data links and combat personnel recovery system, which were used successfully during Operation Desert Storm and in peacekeeping operations in Bosnia.
The Mass Transportation Business
Cubic first became involved in the dynamic market of mass transportation in 1971, when it acquired Western Data Products of Los Angeles. A year later, the group supplied its first Automatic Fare Collection (AFC) system for Chicago's Illinois Central Gulf Railroad, and by the late 1970s, installed AFC systems for the Hong Kong Mass Transit Railway Corporation and the Eastern Suburbs Railway in Sydney.
Other major awards followed, including a contract to deliver AFC equipment for the second phase of the Bay Area Rapid Transit (BART) system in San Francisco; a contract from the Washington Metropolitan Area Transit Authority in 1975 to produce AFC equipment for the transit system in Washington, D.C.; and an award from the Pennsylvania Port Authority Transit Company to develop the nation's first AFC system to utilize plastic magnetically encoded tickets.
Continuing the Tradition of Innovation
Cubic's tradition of innovation continues into the 21st century as Cubic's cutting-edge research and development holds promise for customers worldwide. Today, the company's major businesses- Cubic Global Defense and Cubic Transportation Systems - have become world leaders in their respective industries with leading-edge technologies.
In other areas, including C4ISR and RFID, Cubic is committed to expanding and improving upon its products and systems to meet the diverse needs of national defense and intelligence communities.
This company is far from ideal when looking at either the fundamentals or the technicals. So why would I be interested in a company like this? And the answer is the forward looking estimates. If true, this company could be on the verge of moving higher quickly. Simply based on the estimates of analysts the stock is expected to produce a one year total return on investment over 26%. But an estimated 5 year earnings growth rate of over 31% could easily support a P/E ratio greater than 16 putting the one year estimated total return much higher than 26%.
For investors interested in a growing dividend, growing earnings and a low payout ratio normally ensures that dividends will also grow at a rate equal to or greater than earnings growth. In addition, high liability coverage and low debt also provide further insurance that dividends can increase over time.
While not the rock solid type of fundamentals and technicals I'm normally attracted to, Cubic has a certain appeal to me and I intend to add this company to my watch list. I may even purchase a few shares just to force me to monitor it a little closer than I would by simply putting it on a watch list. That way as the company begins to perform as expected I'll quickly notice the movement and be able to react quickly. This company may or may not act as expected, but if it does I expect it to move quickly. And a company who's stock can move 25% higher with a dividend growing at 20% in just one year, is a company I need to own.