Technical Communications Corporation (NASDAQ:TCCO) Running Up The Charts

Technical Communications Corporation (NASDAQ:TCCO) recently reported quarterly earnings. It was celebrated by the market as the share price surged. The results were released on May 11, 2017, and on the charts, we could find an incredible increase in the volume the following day, which crossed the 3 million share level. In less than a month, the share price went from $2.5 to almost $5.5. That is a 120% return. Before we explain, just check the most recent price action.SourceTechnical Communications CorporationAccording to the last annual report, Technical Communications Corporation was founded in 1961 in Massachusetts. In the very beginning, the company was entirely focused on providing consulting services. Some years later, the company expanded its activities to designing, manufacturing, and selling "communications security devices, systems, and services". TCCO's products have been sold in over 115 countries to "governments, military agencies, telecommunications carriers, financial institutions and multinational corporations." The company helps these organizations protect vital information transmitted via video, fax, and voice networks.According to what market participants highlighted on the iHub forum and what we have seen on Yahoo Finance, the company is so focused on its activities that it does not provide a lot of press releases. This does not have to be a bad sign. But, it means that the upward trend that we saw may be entirely justified by its last quarterly report put out on May 11, 2017. Let's have a look at the numbers.

• Revenue of $1,385,000
• Net income: $128,000 ($0.07 per share)

The quarter was quite satisfactory. The company reported a net loss of $(263,000), or $(0.14) per share in the same quarter of 2016 and a revenue of $2,017,000. Carl H. Guild, President, and CEO of TCCO, celebrated the return to profitability in the following way:

“The return to profitability this quarter was anticipated as we began shipping under recently received orders primarily for our radio encryptors for deployment into Afghanistan. Shipments under these contracts will continue throughout our third quarter ending July 1, 2017.” Source

The press release was quite short and only disclosed information about the income statement. We wanted to have a look at the balance sheet and went to the document filed on the SEC website. The photo of the balance sheet amazed us. The following are the assets of the company (Check the cash on hand):Assets April 1, 2017 October 1,2016Current Assets:Cash and cash equivalents $1,128,160 $2,589,036Restricted cash12,93027,592Marketable securities - held to maturity622,602362,170Accounts receivable - trade895,974111,849Inventories, net1,834,0111,643,922Other current assets179,558214,047Total current assets4,673,2354,948,616Marketable securities - held to maturity-373,668Equipment and leasehold improvements4,534,8394,531,264Less: accumulated depreciation and amortization(4,448,943)(4,382,335)Equipment and leasehold improvements, net85,896148,929Total Assets $4,759,131 $5,471,213SourceThe following are the liabilities. Note that the total amount of liabilities is almost 12 times smaller than the total amount of assets.Liabilities and Stockholders’ Equity April 1, 2017 October 1, 2016Current Liabilities:Accounts payable$91,153$119,087Accrued liabilities:Accrued compensation and related expenses258,370238,144Customer deposits11,468118,983Other current liabilities 44,074 80,635Total current liabilities 405,065 556,849SourceThe per share amounts are even more interesting and show that the market is undervaluing the company:

• Book Value per share: $2.37
• Revenue per share: $1.63
• Cash per share: $0.95
• Share price when announced: $2.5
• Share price now: $5.11
• Returns for those individuals, who got the information on time: 104%

Can the share price continue creeping up? The company is trading at 2x times the book value per share, and there are companies out there trading at 3x times or even 5x times. What do we need to look? It is all about the company growth here. TCCO reported positive net income, thus the market reacted very well. If the net income keeps growing, market participants may push up the share price even more. We need to be alert on this name and react quickly to new announcements.ConclusionTechnical Communications was all about being alert on the last 10-Q. The company reported a profit of $0.07 per share, while it had a loss of $0.14 per share in the same quarter in 2016. Market participants appreciated that and pushed up the share price on the day of announcement and over the course of the the following days. If the company keeps surprising the market over the next few quarters, the share price will keep climbing. We encourage market participants to stay informed in order to react quickly.We will be updating our subscribers as soon as we know more. For the latest updates on TCCO, sign up below!Image courtesy of FlickrDisclosure: We have no position in TCCO and have not been compensated for this article.