Is it a good company at a reasonable price? The good news is that insiders are buying. The other good news is that the stock price would seem to be cheap. However, being cheap does not mean that a stock is a good buy. They are having trouble getting earning money. They have suspended the dividends. This is not good news. Analysts expect it to do well in the future. However, buying this company is a risk and you should not use money you cannot afford to lose. This company has only occasionally given a decent return for shareholders, so you have to wonder if it is worth the risks.
I do not own this stock of Quarterhill Inc (TSX-QTRH, OTC-QTRHF), but I used to. I bought this company in 2000 as WiLan Inc. (TSX-WIN, OTC-WILN. It was an up and coming company in communications. I sold it in 2006 after losing most of my investment. This stock has never recovered from the bubble that occurred in 2000. I lost all hope of ever making any money on this stock. The other thing is that they completely refocused their company to earn money on their patents. Since then, they have reinvented themselves a number of times.
When I was updating my spreadsheet, I noticed Revenue for 2022 was restated because of the sale of Wi-Lan Inc. See notice on Newswire. I also notice that although they cancelled the dividend, insiders are buying. Of the insiders buying that I follow is the CEO, CFO, Chairman and another director.
If you had invested in this company in December 2013, for $1,001.10 you would have bought 282 shares at $3.55 per share. In December 2023, after 10 years you would have received $253.10 in dividends. The stock would be worth $549.90. Your total return would have been $803.00. This would be a total loss of 2.67% per year with 5.82% from capital loss and 3.14% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $3.55 | $1,001.10 | 282 | 10 | $253.10 | $549.90 | $803.00 |
The current dividend yield is 0% with dividends being cut in 2022 and cancelled in 2023.
The Dividend Payout Ratios (DPR) mostly not calculable because of earnings losses and negative cash flows. The DPR for 2023 for Earnings per Share (EPS) cannot be calculated because of earning losses. The DPR for 2023 for Cash Flow per Share (CFPS) cannot be calculated because of a negative cash flow with 5 year coverage good at 29%. The DPR for 2023 for Free Cash Flow (FCF) is negative due to a negative FCF with 5 year coverage at 52%. There is no agreement on what the FCF is. However, in 2023, all sites agreed it was negative.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | N/C | N/C |
| CFPS | N/C | 29.47% |
| FCF | -31.49% | 52.02% |
Debt Ratios are fine for 2023, but have deteriorated a lot for the first 2 quarters of 2024. The Long Term Debt/Market Cap Ratio for 2023 is good at 0.33 and currently at 0.49. The Liquidity Ratio for 2023 is good at 2.93 and is low at 1.37 currently. If you added in Cash Flow after dividends, the ratios are fine at 2.86 and currently it is negative because lack of cash flow this year. The Debt Ratio for 2023 is good at 2.34 and 2.29 currently. The Leverage and Debt/Equity Ratios for 2023 are good at 1.75 and 0.75 and currently at 1.77 and 0.44.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.33 | 0.49 |
| Intang/GW | 0.64 | 0.57 |
| Liquidity | 2.93 | 1.37 |
| Liq. + CF | 2.86 | -6.98 |
| Debt Ratio | 2.34 | 2.29 |
| Leverage | 1.75 | 1.77 |
| D/E Ratio | 0.75 | 0.77 |
The Total Return per year is shown below for years of 5 to 25 to the end of 2023 in CDN$. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2018 | 5 | -24.21% | 10.82% | 7.95% | 2.86% |
| 2013 | 10 | -22.26% | -2.67% | -5.82% | 3.14% |
| 2008 | 15 | -4.83% | 9.23% | 2.95% | 6.28% |
| 2003 | 20 | -1.81% | -4.06% | 2.26% | |
| 1998 | 25 | 3.73% | 1.05% | 2.67% |
The Total Return per year is shown below for years of 5 to 22 to the end of 2023 in US$. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2018 | 5 | -23.74% | 11.32% | 8.37% | 2.95% |
| 2013 | 10 | -23.93% | -5.20% | -7.90% | 2.70% |
| 2008 | 15 | -6.39% | 7.97% | 1.70% | 6.28% |
| 2003 | 20 | -1.20% | -3.74% | 2.54% | |
| 2001 | 22 | 0.03% | -2.49% | 2.52% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 8.31, 12.97 and 16.34. The corresponding 10 year ratios are 10.96, 16.59 and 21.70. The corresponding historical ratios are negative and therefore useless. The current ratio is negative and cannot be used. The P/E Ratio for 2024 is 82.11 based on a stock price of $1.56 and 2025 EPS estimate of $0.02. This is way above the 10 year ratios. This stock price testing suggests that the stock price is relatively expensive
I get a Graham Price of $0.71. The 10-year low, median, and high median Price/Graham Price Ratios are 0.56, 0.98 and 1.45. The current P/GP Ratio is 2.19 based on a stock price of $1.56. This ratio is above the high ratio for the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.
I get a 10-year median Price/Book Value per Share Ratio of 0.94. The current P/B Ratio is 1.32 based on a stock price of $1.56, Book Value of 136M, and Book Value per Share of $1.18. The current ratio is 41% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. Although the ratio is 1.32 is not a very high one, generally speaking.
I get a 10-year median Price/Cash Flow per Share Ratio of 6.43. The current ratio is 7.43 based on Cash Flow for the last 12 months of $24.2M, Cash Flow per Share of $0.21 and a stock price of $1.56. The current ratio is 17% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I cannot do any dividend yield testing because the dividends have been cancelled.
The 10-year median Price/Sales (Revenue) Ratio is 1.83. The current P/S Ratio is 0.81 based on a stock price of $1.56, Revenue estimate for 2024 of $220.9M and Revenue per Share of $1.91. The current ratio is 56% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
Results of stock price testing is that the stock price is probably cheap. The P/S Ratio test is one of the few that is a good test. It says that the stock price is relatively cheap. The other two tests that are ok is the P/B Ratio test that says the stock price is expensive and the P/CF Ratio test that says that the stock price is relatively reasonable but above the median. I am going with the P/S Ratio test.
When I look at analysts’ recommendations, I find Strong Buy (1) and Buy (2). The consensus would be a Strong Buy. The 12 month stock price consensus is $2.18 with a high of $2.30 and low of $2.00. The 12 month stock price of $2.18 implies a total return of $39.74% all from capital gains.
Most analysts on Stock Chase for 2024 like what this company is doing. Stock Chase gives this stock 4 stars out of 5. Christopher Liew on Motley Fool in July 2024 thought that this is a low cost stock that is perfect for getting started in the stock market. Christopher Liew on Motley Fool also suggested this stock to get into in January 2023. The company put out a Press Release about their 2023 annual results. The company put out a Press Release about their second quarter of 2024.
Simply Wall Street via Yahoo Finance reviews this stock. Simply Wall Street has one warning on this stock of currently unprofitable and not forecast to become profitable over the next 3 years. Simply Wall Street gives this stock 2 and one half stars out of 5.
Quarterhill Inc is focused on the acquisition, management, and growth of companies in the intelligent transportation systems (ITS) and innovation and licensing industries. It operates in two segments Licensing, and Intelligent Transportation Systems. Its geographical segments are the United States, Canada, Chile, China, Korea, Singapore, Taiwan, Thailand, Ukraine, and the Rest of the world. The majority of the revenue comes from the United States. Its web site is here Quarterhill Inc.
The last stock I wrote about was about was Finning International Inc (TSX-FTT, OTC-FINGF) ... learn more. The next stock I will write about will be Chesswood Group Ltd (TSX-CHW, OTC-CHWWF) ... learn more on Wednesday, November 13, 2024 around 5 pm. Tomorrow on my other blog I will write about Trump and Canada .... learn more on Tuesday, November 12, 2024 around 5 pm.
This blog is meant for educational purposes only and is not to provide investment advice. I am not a licensed professional investment advisor. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.
See my site for an index to these blog entries and for stocks followed. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures. November 12, 2024
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