Monday, December 4, 2017

Quarterhill Inc.

Sound bite for Twitter and StockTwits is: Dividend Paying Telecom. The stock is probably cheap. They cannot afford their dividends and never could so far. They are patent troll but are trying to get into the Internet of Things. See my spreadsheet on Quarterhill Inc.

I do not own this stock of Quarterhill Inc. (TSX-QTRH, NASDAQ-QTRH), 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. The other thing is that they completely refocused their company to earn money on their patents.

The company cut their dividends by over 76% in 2017. They are expected to do better in 2017 and then worse again in 2018. Dividends were probably cut because they could not afford them. In 2016 Dividend Payout Ratios was 172%. In the last 5 years they have paid out more than they have earned. Or more correctly they have a total earnings loss over the past 5 years so a 5 year coverage calculation is not possible. DPR is expected to be around 19% in 2017, but rising to 131% in 2018 before falling to 74% in 2019.

They started to pay dividends in 2009, but from the beginning they could not afford them. They had earning losses in 2008, 2009 and 2010. Since 2009 they have paid out way more in dividends then they have made in earnings.

The dividends are currently covered by Cash Flow. The Dividend Payout Ratio for CFPS is 39% in 2016 with 5 year coverage at 33%.

The debt ratios are quite good. The Liquidity Ratio is 4.97 for 2016 with 5 year median of 3.59. The Debt Ratio for 2016 is 7.29 with 5 year median of 5.66. Leverage and Debt/Equity Ratios for 2016 are 1.16 and 0.16 with 5 year medians of 1.15 and 0.15.

The Return on Equity is quite low with the ROE for 2016 at 4.5% with a 5 year median of 4%. The Comprehensive Income for 2016 is also 4.5% with 5 year median of 4%. Another problem is the declining Book Value. Book Value has decreased by 5.2% per year over the past 5 years or by 23.4%.

They have lots of cash on hand at $0.38 or 17.5% of the stock's price.

Unfortunately the company has had too many years of earnings losses to get a fix on any sort of past or historical Price/Earnings per Share Ratios. The current P/E Ratio is 8.23 CDN$ based on a stock price of $2.20 CDN$ and 2017 EPS estimate of $0.27 CDN$ ($0.21 US$). A P/E Ratio of 8.23 is a relatively low one.

I get a Graham Price of $4.16 CDN$. The 10 year low, median and high median Price/Graham Price ratios are 0.63, 1.12 and 1.56 CDN$. The current P/GP Ratio is 0.53 based on a stock price of $2.20 CDN$. However, note that the Graham Price calculations also suffer when you have lots of earnings losses years. This stock price testing suggests that the stock price is relatively cheap.

I get a 10 year Price/Book Value per Share Ratio of 1.63 US$. The current P/B Ratio is 0.77 US$. The current P/B Ratio is some 53% lower than the 10 year ratios. The current P/B Ratio is based on Book Value of $267M US$, BVPS $2.26 US$ and a stock price of $1.74 US$. You would get basically the same results if you used CDN$. This stock price testing suggests that the stock price is relatively cheap.

The median historical dividend yield is 3.06%. The current dividend yield is 2.27% based on dividends of $0.05 CDN$ and a stock price of $2.20 CDN$. The current dividend yield is 25.7% lower than the median historical yield. Note that the dividends have just been cut by some 76%. This stock price testing suggests that the stock price is relatively expensive.

The 10 year Price/Sales (Revenue) Ratio is 5.46 US$. The current P/S Ratio is 1.50 US$. The current P/S Ratio is based on 2017 Revenue estimate of $137M US$, Revenue per Share of 1.15 US$ and a stock price of $1.74 US$. This stock price testing suggests that the stock price is relatively cheap.

When I look at analysts' recommendations I find Strong Buy (1), Buy (2) and Hold (1). The consensus would be a Buy. The 12 month stock price consensus is $3.11 CDN$ ($2.44 US$). This implies a total return of $43.45 with 2.27% from dividends and 41.18% from capital gains.

There is a news release on Cision about the company appointing Douglas Parker as new CEO. MTNV Staff Contributor on MTNV News gives some analysis of this stock. There is a Press Release on Cision about the company's third quarterly results. See what analysts are saying about this stock on Stock Chase.

Quarterhaill Inc., formerly Wi-LAN Inc. is a diversified investment holding company focused on acquiring technology companies in the Industrial Internet of Things segment. It targets companies which capture, analyze and interpret data. 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, December 06, 2017 before 10 am. Tomorrow on my other blog I will write about Dividend Stocks December 2017... learn more on Tuesday, December 5, 2017 around 5 pm.

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. 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 or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

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