Ituran Location & Control (ITRN) reported Q4 results this morning. Despite continued pressure from unfavorable foreign exchange, revenue for the period rose 6.5% from the prior year to $74.9 million and came in just above the consensus estimate of $74.6 million as the company was able to add another 44,000 aftermarket subscribers and even saw a net increase of 2,000 in its original equipment manufacturer (OEM) subscriber base after four straight quarters of decline. While the pressure from currency and higher freight costs, as well as from unrealized losses in its equity investments, had a greater effect on the bottom line and led to earnings of 47 cents per share that were 5 cents lower than the 52 cents analysts had been expecting, this still represented decent year-over-year profit growth of 2.2%. This also allowed ITRN to produce $8.2 million in free cash flow during the quarter and boost its already strong net cash balance by another $1.5 million to $16.0 million while also spending $3.0 million on share buybacks and paying out $2.8 million in dividends.

What’s more, thanks to the much higher-than-anticipated subscriber growth—driven especially by rising demand from financial firms looking to insure secondhand cars in Latin America—the 185,000 new subs the company added in total last year were well ahead of its annual target of 140,000-160,000. As a result, it now has nearly 2.1 million paying subscribers and expects this number to continue growing by an even bigger 180,000-200,000 annually going forward. When you also consider that the operating leverage in ITRN’s business model should allow it to add these new subscribers without a corresponding significant increase in costs and the company sees the availability and pricing of components to improve further in the periods ahead, I think it is in excellent position to continue enjoying solid top-line growth and expanding margins that yield even stronger growth in earnings and free cash flow production in 2023. If so, I expect the stock’s attractive value to become more difficult to ignore.