Should Investors Watch IDT Corp. (IDT) in the Telecommunications Sector?

As we know, telecommunication services reside at the core of the digital economy, fueling numerous activities and operations. From data processing to messaging, a lot is covered within the ambit of the segment, continuously solidifying its necessity.

The wide adoption of artificial intelligence (AI) and cloud-based solutions is transforming how actions are performed and how business operations are carried out. This has surged data consumption in the U.S., and service providers are increasingly investing and working to meet this demand surge.

One such strong contender in the telecom industry is IDT Corporation (IDT), which is a global provider of fintech and communications services through a portfolio of synergistic businesses. IDT caters to customers through Fintech, National Retail Solutions, net2phone, and Traditional Communications segments.

The company’s innovative and reliable products and services, such as point of sale, BOSS Money, and Leaf, serve customers, including individuals, organizations, and partners/resellers.

Through 2024, IDT introduced innovations, expanding its operations and reach. In June 2024, the BOSS Money brand introduced domestic money transfers within the U.S., which have now been widened to other locations like Venezuela, Brazil, and Eritrea, expanding customer payment options.

In the recent quarter, the company reported impressive first-quarter 2025 financial results. IDT reported solid growth across all of its segments and reported strong recurring revenue growth. IDT's NRS segment's recurring revenue was up 29%, whereas its BOSS Money revenue grew over 39% year-over-year to $33.70 million.

IDT’s shares resonate with its efforts. IDT’s stock has surged 37.5% over the past six months and 35.6% over the past year to close its last trading session at $48.12.

Let’s look at factors that could influence IDT’s performance in the upcoming months.

Positive Recent Developments

On February 6, 2025, IDT’s wholesale carrier services business, IDT Global, entered into a Preferred Partner Agreement with Natcom, Haiti's leading telecommunications provider. IDT Global will help in managing international long-distance traffic for Natcom’s network in Haiti and protect it against revenue leakage, alongside strengthening Natcom’s position as a trusted and reliable telecommunications provider.

The strategic partnership reinforces IDT global’s position as a leader in managed voice services. It enables the companies to develop and launch new, high-value, international voice offerings for customers.

Also, on January 15, 2025, IDT’s BOSS Money, the remittance and payments brand, announced three new destination countries: Venezuela, Brazil, and Eritrea. It also expanded its payment options for customers sending money from BOSS Money retailer locations. The introductions offer zero-fee app transfers to Venezuela and allow new funding options for retail customers.

Robust Financials

IDT’s revenues increased 2.8% year-over-year to $309.57 million during the first quarter that ended October 31, 2024. Its gross profit grew 14.5% from the year-ago value to $107.63 million. The company’s income from operations of $23.64 million indicates growth of 37.7% from the prior year’s quarter.

In addition, the company’s non-GAAP net income and EPS were $18.10 million and $0.71, up 120.7% and 121.9% year-over-year, respectively. Its adjusted EBITDA increased 30.5% from the year-ago value to $29.10 million.

Also, as of October 31, 2024, the company's cash and cash equivalents and total assets stood at $148.02 million and $554.63 million, respectively.

Solid Historical Growth

IDT’s EBITDA has grown at a CAGR of 10.7% over the past three years, and its EBIT has increased 10.4% over the same timeframe. Meanwhile, its normalized net income and tangible book value have improved at CAGRs of 9.4% and 17.3%, respectively.

High Profitability

IDT’s trailing-12-month net income margin of 6.10% is 57.7% higher than the industry average of 3.87%. Its trailing-12-month Return on Common Equity of 32.15% is considerably higher than the industry average of 5%.

Furthermore, the stock’s trailing-12-month ROTC and ROTA of 18.68% and 13.35% are favorable compared to the industry averages of 3.92% and 1.79%, respectively. Similarly, its trailing-12-month asset turnover ratio of 2.30x is 372.2% higher than the industry average of 0.49x.

POWR Ratings Reflect Promise

IDT’s solid fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, translating to a Strong Buy in our proprietary system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. IDT has an A grade for Growth, which is in sync with its impressive historical growth and solid financial performance in the last reported quarter.

In addition, the stock has earned a B grade for Stability, consistent with its 5-year beta of 0.77.

IDT is ranked #3 in the 19-stock Telecom - Domestic industry.

Beyond what I have stated above, we have also given IDT grades for Sentiment, Value, Momentum, and Quality. Get access to all the IDT Ratings here.

Bottom Line

IDT is a leading global provider of fintech and communications solutions. The company serves a variety of customers with solutions which help advertisers and marketers reach into underserved consumer markets, facilitates innovative international remittances and fintech payments solutions, and much more.

The company is continuously innovating its operations and widening its capabilities to reach a broad customer base. Also, its financial performance is in line with its operations as depicted by consistent revenue growth, and record gross profit and gross profit margins.

Given IDT’s solid financials, accelerating profitability, and promising growth outlook, this telecom stock could be an ideal buy now.

How Does IDT Corporation (IDT) Stack Up Against Its Peers?

While IDT has an overall POWR Rating of A, investors could also check out these other stocks within the Telecom - Domestic industry with A (Strong Buy) or B (Buy) ratings: Ooma, Inc. (OOMA), Spok Holdings, Inc. (SPOK), and Verizon Communications Inc. (VZ).

For exploring more A and B-rated telecom stocks, click here.

What To Do Next?

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IDT shares were trading at $48.27 per share on Thursday afternoon, up $0.15 (+0.31%). Year-to-date, IDT has gained 1.58%, versus a 3.15% rise in the benchmark S&P 500 index during the same period.

Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.

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