I do not own this stock of Quarterhill Inc (TSX-QTRH, OTC-QTRHF). 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 and became a patent troll which was not the sort of company I like.
When I was updating my spreadsheet, I noticed it has been reinventing itself again. They had a good year in 2019. Their revenue is increasing and they made a profit. They may again become an interesting company to invest in. A negative might be that EPS is expected to drop, especially by 2021 when they are expected to have an earnings loss. They have dropped their NASDAQ listing and have switched their currency back to CDN$.
The dividend yields are currently low with dividend growth currently non-existent. The current dividend yield is low (under 2%) at 1.85%. The 5, 10 and historical median dividend yields are moderate (2% to 4%) at 3.23%, 3.00% and 2.78%. The company had some good dividend increases until 2015. In 2017 the dividends were decrease by 76% and have been flat ever since. Analysts do not expect any change in the near future.
The Dividend Payout Ratios (DPR) could be improved. The DPR for EPS for 2019 is 43%. The 5 year coverage cannot be calculated due to earning losses. The DPR for CFPS for 2019 is 14% with 5 year coverage at 27%. The DPR for Free Cash Flow for 2019 is 70% with 5 year coverage at 39%. However, sites I looked at did not agree on FCF, but FCF DPR quoted is representative.
Debt Ratios are very good. The Long Term Debt/Market Cap Ratio is 0.00 (even though there is some long term debt). The Liquidity Ratio is very good at 3.84 as is the Debt Ratio at 6.72. The Leverage and Debt/Equity Ratios are also very good at 1.17 and 0.17.
The Total Return per year is shown below for years of 5 to 21 to the end of 2019 in CDN$. 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. |
|---|---|---|---|---|---|
| 2014 | 5 | -21.71% | -9.63% | -13.66% | 4.03% |
| 2009 | 10 | 7.18% | 3.26% | -2.63% | 5.89% |
| 2004 | 15 | 4.67% | 0.37% | 4.30% | |
| 1999 | 20 | -8.04% | -9.82% | 1.78% | |
| 1998 | 21 | 3.44% | 0.51% | 2.92% |
The Total Return per year is shown below for years of 5 to 18 to the end of 2019 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. |
|---|---|---|---|---|---|
| 2014 | 5 | -23.46% | -12.14% | -15.74% | 3.60% |
| 2009 | 10 | 4.92% | -1.20% | -6.40% | 5.20% |
| 2004 | 15 | 4.82% | 0.11% | 4.71% | |
| 2001 | 18 | -0.84% | -3.86% | 3.03% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 11.74, 19.93 and 25.77. The corresponding 10 year ratios are 10.96, 16.59 and 21.06. The Corresponding historical ratios are all negative and are of not help. The current P/E Ratio is 18.78 based on a stock price of $2.70 and EPS estimate for 2020 of $0.14. This stock price testing suggests that the stock price is relatively reasonable but above the median. This is in CDN$.
I get a Graham Price of $2.84. The 10 year low, median, and high median Price/Graham Price Ratios are 0.68, 1.06 and 1.45. The current P/GP Ratio is 0.95 based on a stock price of $2.70. This stock price testing suggests that the stock price is relatively reasonable and below the median. This is in CDN$.
I get a 10 year median Price/Book Value per Share Ratio of 1.34. The current P/B Ratio is 1.08 based on a Book Value of $297M, Book Value per Share of $2.50 and a stock price of $2.70. The current ratio is 14% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median. This is in CDN$.
I get a 10 year median Price/Cash Flow per Share Ratio of 10.99. The current P/CF Ratio is 9.08 based on CFPS for last 12 months of $0.30, Cash Flow of $35M and a stock price of $2.70. The current ratio is 17% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median. This is in CDN$.
I get an historical median dividend yield of 2.78%. The current dividend yield is 1.85% based on dividends of $0.05 and a stock price of $2.70. The current dividend yield is 33% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive. This is in CDN$.
I get a 10 year median dividend yield of 30%. The current dividend yield is 1.85% based on dividends of $0.05 and a stock price of $2.70. The current dividend yield is 38% below the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively expensive. This is in CDN$.
The 10 year median Price/Sales (Revenue) Ratio is 3.21. The current P/S Ratio is 1.83 based on a stock price of $2.70, Revenue estimate of $175M ($134M US$) and Revenue per Share of $1.29. The current ratio is 43% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This is in CDN$.
Results of stock price testing is that the stock price is probably reasonable. The dividend yield tests are showing the stock price as expensive. However, dividends were cut by over 75% in 2017 and have been flat ever since. Also, the stock price has been rising is up by 62% this year. The P/S Ratio is a good test and it show that the stock price is relatively cheap. Most of the other tests are showing the stock price as reasonable.
Is it a good company at a reasonable price? This company has reinvented itself a number of times. Analysts expect that this company will not do as well over the next couple of years as it did in 2019. That is hard to say. Certainly, the dividend has been cut and the stock price is down over the past 5 years and 10 years. So, this would be a risky investment.
When I look at analysts’ recommendations, I find Strong Buy (3), Buy (1) and Hold (1). The consensus would be a Buy. The 12 months stock price is $3.02 ($2.35 US$). This implies a total return of 15.62% with 13.77% from capital gains and 1.85% from dividends based on a stock price of $2.70.
The most recent analyst’s reports are positive on Stock Chase. Stephanie Bedard-Chateauneuf on Motley Fool talk about this being a good tech stock for your TFSA. A writer on Simply Wall Street talk about institutional ownership in this company. A writer on Simply Wall Street talks last year about this company’s stock rising in 2019. It has also risen in 2020, but not enough to give it positive TSR over the past 5 years.. A recent article on Yahoo Finance talk about this company acquiring IBM Patents .
Quarterhill Inc is a growth-oriented company in the Intellectual Property and Intelligent Transportation System (ITS) industries. Its goal is to pursue an investment strategy that capitalizes on attractive market trends in both ITS and its adjacent markets. 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 Friday, November 27, 2020 around 5 pm. Tomorrow on my other blog I will write about Best Canadian Stocks.... learn more on Thursday, November 21, 2020 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.
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