Wednesday, December 9, 2015

WiLan Inc.

On my other blog I am today writing about possible cheap dividend stocks for December 2015 learn more...

Sound bite for Twitter and StockTwits is: Cheap and risky. I would not buy this company. I do not like its business model. Besides it seems to have a hard time making money and cash flow. See my spreadsheet on WiLan Inc.

I do not own this stock of WiLan Inc. (TSX-WIN, OTC-WILN), but I used to. I am still following stock because I once owned it.

The company has had 3 earnings loss year in the past 5 years and 6 earnings loss years in the past 10 years. It simply cannot afford the dividends it is paying. This is reflected in the recent decrease of 76%. With this decrease the dividends are down around 10.6% per year over the past 5 years to date. You have to make money in order to pay dividends.

The company has revenue growth. For example, Revenue in US$ grow by 24% and 16.8% per year over the past 5 and 10 years in US$ as this company is now reporting in US$. Revenue per Share is not as good with growth at 20% and 5.1% per year over the past 5 and 10 years. Revenue per Share is lower because outstanding shares have increased by 3.3% and 11% per year over the past 5 and 10 years.

In trying to judge cash flow, the real problem is years with negative cash flow. They have paid dividends since 2009, so in the 6 years from 2009 to 2014 inclusive, they could cover the dividend with Cash Flows only in 3 of these 6 years.

The stock price hit a high in 2011 and it has been downhill ever since. The shares are down some 58% so far this year. The total return to date is a loss of 20.81% per year with a capital loss of 52.59% per year and dividends of 4.78% per year.

I cannot do any P/E Ratio testing because of so many years of not earnings. I get a Graham Price of $1.85. The 10 year low, median and high median Price/Graham Price Ratios are 0.75, 1.12 and 1.61. The current P/GP Ratio is 0.79 based on a stock price of $1.46. This stock price testing suggests that the stock price is relatively reasonable.

I get a 10 year Price/Book Value per Share Ratio of 2.00. The current P/B Ratio is 0.65 based on BVPS of $2.24 and a stock price of $1.46. This stock price test suggests that the stock price is relatively cheap.

There are few analysts' following this stock. In analysts' recommendations there is one strong Buy and 2 Hold recommendations. The 12 month stock price is $2.51 US$ or $2.83 CDN$. This implies a total return of 93.84% with 3.42% from dividends and 97.26% from capital gains based on a current stock of $1.46 CDN$. Someone is dreaming.

There is an article by Tim Shufelt in the G&M regarding how the company has not had the payoffs in patent fees that were expected. Patent Trolls like this company are starting to lose in the current legal climate in the US.

I will have only one entry for this stock as I must do on some stock because I cover too many stocks to do double entries on all that I follow.

Wi-LAN Inc. is an intellectual property licensing company. The Company develops, acquires, licenses and enforces a range of patented technologies which are utilized in products in the communications and consumer electronics markets. Its web site is here WiLan Inc.

This blog is meant for educational purposes only, and is not to provide investment advice. 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 website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

No comments:

Post a Comment