IDT Corporation: A Hidden Gem in Telecom's Recovery – Buy Now Before the Surge

In a market where telecom stocks have been overshadowed by tech volatility and regulatory headwinds, IDT Corporation (NYSE: IDT) stands out as a rare contrarian play. With a 54% undervaluation relative to its growth trajectory, a 116% surge in core earnings, and a debt-free balance sheet, IDT offers a compelling entry point for investors seeking asymmetric upside. Let’s dissect why this overlooked telecom player is primed to outperform—and why the risks are overblown.

The Undervalued Telecom Titan

IDT’s valuation discrepancy is stark. Despite a 63% year-over-year rise in market cap to $1.49 billion (as of May 2025), its stock trades at a P/E ratio of just 10x trailing earnings—a discount to peers like AT&T (15x) and Verizon (12x). This mispricing is amplified by 116% growth in Adjusted EBITDA across its core segments, driven by its fintech and AI-driven telecom initiatives.

Growth Engine #1: National Retail Solutions (NRS) – Dominating Fintech

IDT’s NRS division is a cash machine. Its 32% year-over-year revenue growth to $31.6 million in Q2 2025 stems from aggressive expansion into emerging markets like Venezuela and Eritrea, with plans to enter Brazil by Q3. The rollout of enhanced SaaS tools (up 15% in adoption) and 1,700 new POS terminals in Q2 alone underscores its moat in serving small businesses.

Growth Engine #2: Net2phone’s AI Revolution – Telecom 2.0

Net2phone’s AI virtual agent, launched post-Q2, is a game-changer. By automating 90% of customer interactions, it slashes costs while boosting consistency. Subscription revenue rose 9% organically (14% in constant currency), driven by gains in Brazil and Mexico. Margins here have doubled year-over-year, hitting 13% Adjusted EBITDA, proving scalability.

Debt-Free Flexibility: A Fortress Balance Sheet

IDT’s $171 million in cash and zero debt as of January 2025 are its secret weapons. This liquidity allows it to:
- Aggressively buy back stock: $8.5 million repurchased in Q2 alone.
- Increase dividends: A 20% hike to $0.06/share rewards shareholders.
- Fuel expansion: With no interest payments, capital is fully deployable into high-return ventures like AI and global fintech rollouts.

Addressing Risks: Why the Bear Case Fails

Critics cite two risks:
1. Insider sales: Howard Jonas sold 2,750 shares in January 2025. But his 2.6 million indirect holdings (via trusts) and the company’s $8.5 million buyback signal confidence.
2. BOSS Money dependency: While the digital payments segment is critical, NRS and Net2phone now contribute 68% of total EBITDA growth, diversifying risk.

Catalysts Ahead: The Final Push to $75+

• Brazil expansion: NRS’s entry into Latin America’s largest economy could add $10 million+ in annual revenue by 2026.
• AI scalability: Net2phone’s tool could cut operating costs by 20%, boosting margins further.
• Valuation re-rating: At $58/share, IDT trades at 10x 2025 earnings. A move to 12x would push the stock to $70+, with upside to $80 as growth accelerates.

Final Verdict: Buy Now for 2026 Gains

IDT’s combination of debt-free agility, sector-leading growth, and mispriced valuation creates a 100%+ upside potential over 12–18 months. While insider sales and BOSS dependency are valid concerns, they’re dwarfed by the $1 billion+ runway in emerging markets and AI-driven efficiency gains.

Action to take: Buy IDT at $58/share with a $80 price target, and hold for the ride as telecom’s recovery finally catches up to this overlooked gem.

Investment thesis: Buy now. Wait, and you’ll miss the surge.