Verus International Inc (OTCMKTS: VRUS) is ready to turn the page after two years of underperformance. The stock has started taking off in response to the delivery of a stellar financial report for FY2018. A 100% plus growth in revenue supplemented by margin expansion and a bullish outlook for 2019 might as well do the trick in reinvigorating the stock’s sentiments.
VRUS Share Price Analysis
The stock has already started to spike a move that has seen it close in, on one-year highs. With the upward momentum, gathering pace, a breakout, to two-year highs, could be in the offing. The catalyst behind the recent surge is the acknowledgment that the company is destined for greatness.
The company projecting quarterly sales growth in excess of 100% in addition to expansion into core markets continues to trigger renewed investor interest. The company has already secured a multimillion-dollar order from a distributor, set to strengthen its revenue base this year.
While the stock is still languishing at the $0.01 handle, it could be a matter of time before it takes out the $0.02 resistance level. A spike followed by a close above the critical resistance level should reaffirm the emerging uptrend, setting the stage for the stock to make a run for three-year highs.
Below the $0.02 level, Verus International remains susceptible to further drops in continuation of the long-term bear trend. However, if recent price action is anything to go by, then the stock looks set to continue edging higher.
What Does Verus International Do?
Verus International through its subsidiary, Verus Foods, is engaged in the business of selling branded consumer products to customers worldwide. The company’s pipeline of products is made up of frozen food meat, poultry, seafood, and vegetables. Its distribution network spans across the Middle East, North Africa, Saudi Arabia among others.
Why is Verus International Exploding?
Shares of Verus International are exploding on investors reacting to the company delivering a stellar financial report that underscores robust growth. For the full 2018 fiscal year, the company generated sales of $5.8 million, representing a 101% year over year increase. Gross margin improved to within higher range expectations of 12.9%.
While the full year results include the impact of the company’s legacy real estate business, Q4 portion provides clear insight into what investors should expect in 2019. During the quarter, the company generated revenues of $2.2 million a 124% year over year increase. Margins were also up to 11.6%.
“In Q4 we began shipping on our multiproduct order, which commenced part way through the quarter. Sales will accelerate even faster as our newest orders begin to ship in upcoming months,” said CEO Anshu Bhatnagar.
Verus International has already opened discussions for new contracts in core markets as it continues to pursue new revenue streams. A bullish 2019 outlook indicating sales growth in the excess of 100% all but underscores the underlying growth.
The management has also confirmed that they are conducting due diligence on seven acquisition targets as part of an effort of pursuing inorganic growth.
Multi-Million-Dollar Supply Agreements
The company’s revenue base has also received a boost on the signing of a deal that paves the way for the company to deliver rice worth $4 million annually, for the Dubai Market. Under the terms of the deal, the company is to supply the rice under both the supplier’s brand name and its brand name.
“As we announce these orders for branded staples found in just about every home and restaurant in our current markets, investors should remember that these are starter quantities. We expect these orders to grow as the season, with the expansion coming from both market penetration and extension into new geographies,” said Verus CEO Anshu Bhatnagar.
The $4 million rice supply deal follows the signing of a $10 million deal where the company is to supply honey products to markets in Europe and the Middle East. The honey supply agreement paves the way for the company to expand its footprint into European markets.
Verus International has achieved significant progress in strengthening its revenue base with the signing of a string of supply agreements. Robust revenue growth might as well be the catalyst that will fuel a rally of Verus International, after the underperformance of the past few years.
That said the stock is likely to continue edging higher as investors take note of the company’s growing revenue base.
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Disclosure: We have no position in VRUS and have not been compensated for this article.