I do not own this stock of Quarterhill Inc (TSX-QTRH, OTC-QTRHF). I am still following stock because I once owned it. I held it from 2000 to 2006 and basically lost all my investment. It was called Wi-Lan (TSX-WIN, NASDAQ-WILN) at that time.
When I was updating my spreadsheet, I noticed that they have changed their accounting currency back to CDN$ from US$. I get very different values from their currently reported in CDN$ for 2019. For example, I get $190.56M for Revenue in CDN$ for 2019 and they get $172.925M. I noticed that my Revenue in CDN$ dropped some 24% between 2019 and 2020. If I translate the current Revenue into US$, I get in US$ a drop in Revenue between 2019 and 2020 of 23%. I am not changing my spreadsheet to what they now report in CDN$.
The dividend yields are low with dividend growth stopped. The current dividend yield is low (under 2%) at 1.92. The 5, 10 and historical dividend yields are moderate (2% to 4% ranges) at 2.78%, 3.00% and 2.59%. The dividends were decreased in 2017 and they have been flat ever since. Analysts do not seem to expect any change in this in the near future.
The Dividend Payout Ratios (DPR) are probably fine. The DPR for EPS for 2020 is 31%. I cannot calculate the 5 year coverage because of earning losses. In 2021 the company is expecting an earnings loss, so both the DPR for EPS and the 5 year coverage cannot be calculated. For 2022, the DPR for EPS is expected to be 83%. The DPR for CFPS for 2020 is 21% with 5 year coverage at 24%. The DPR for Free Cash Flow for 2020 is 17% with 5 year coverage at 19%.
Debt Ratios are fine, but deteriorated a lot in the third quarter with higher debt and less cash. Recently, the Long Term Debt/Market Cap Ratio has been almost 0.00%. However, they took on debt in 2021 and the ratio jumped to 0.20. This is still a low ratio, but the jump is big. The Liquidity Ratio for 2020 is 7.03. However, it is a lot lower, but still good in the third quarter at 2.14. The Cash went down and the debt went up.
The Debt Ratio for 2020 is 9.53. The Debt Ratio for the third quarter is a lot lower at 3.07, but still a good ratio. Debt went up. For these last two ratios I like them to be at 1.50 or higher. The Leverage and Debt/Equity Ratios for 2020 are 1.12 and 0.12. They went up somewhat for the third quarter to 1.48 and 0.48. They are still good ratios was ratios below 2.00 and 1.00 are considered good.
The Total Return per year is shown below for years of 5 to 22 to the end of 2020 in CDN$. 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. |
|---|---|---|---|---|---|
| 2015 | 5 | -24.77% | 10.95% | 6.71% | 4.23% |
| 2010 | 10 | 0.51% | -6.15% | -8.76% | 2.60% |
| 2005 | 15 | 6.50% | 12.91% | 7.89% | 5.03% |
| 2000 | 20 | -10.52% | -11.57% | 1.06% | |
| 1998 | 22 | 4.73% | 2.46% | 2.27% |
The Total Return per year is shown below for years of 5 to 19 to the end of 2020 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. |
|---|---|---|---|---|---|
| 2015 | 5 | -23.50% | 13.28% | 8.88% | 4.40% |
| 2010 | 10 | -1.91% | -8.59% | -10.93% | 2.34% |
| 2005 | 15 | 4.66% | 13.66% | 8.08% | 5.58% |
| 2001 | 19 | 0.99% | -1.28% | 2.27% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 10.00, 12.94 and 17.19. The corresponding 10 year ratios are 10.56, 16.11 and 20.65. The corresponding historical ratios are 3.67, 8.45 and 11.82. The current P/E Ratio is negative so unusable. The P/E Ratio for 2022 is 43.50 based on EPS estimate for 2022 of $0.06 and a stock price of $2.61. The ratio for 2022 is above the high of the 10 year P/E Ratios. This stock price testing suggests that the stock price is relatively expensive. This testing is in CDN$
I get a Graham Price of $1.73. The 10 year low, median, and high median Price/Graham Price Ratios are 0.56, 0.98 and 1.39. The current P/GP Ratio is 1.51 based on a stock price of $2.61. The current ratio is above the 10 year high P/GP Ratio. This stock price testing suggests that the stock price is relatively expensive. This testing is in CDN$
I get a 10 year median Price/Book Value per Share Ratio of 0.95. The current P/B Ratio is 1.18 based on a stock price of $2.61, Book Value of $252M, and Book Value per Share of $2.22. The current ratio is 24% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. The problem with this testing is the decline the book value. However, a declining book value is a risk. This testing is in CDN$.
I get a 10 year median Price/Cash Flow per Share Ratio of 10.99. The current P/CF Ratio is 20.58 based on a stock price of $2.61, Cash Flow for the last 12 months of $18M and Cash Flow per Share of $0.13. The current ratio is 87% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This testing is in CDN$.
I get an historical median dividend yield of 2.59%. The current dividend yield is 1.92% based on dividends of $0.05, and a stock price of $2.61. The current dividend yield is 26% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive. This testing is in CDN$. This test does not work well with declining and flat dividends. However, declining, and flat dividends are also a risk.
I get a 10 year median dividend yield of 3.00%. The current dividend yield is 1.92% based on dividends of $0.05, and a stock price of $2.61. The current dividend yield is 36% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive. This testing is in CDN$. This test does not work well with declining and flat dividends. However, declining, and flat dividends are also a risk.
The 10 year median Price/Sales (Revenue) Ratio is 2.36. The current P/S Ratio is 2.22 based on Revenue estimate for 2021 of $134M, Revenue per Share of $1.18 and a stock price of $2.61. The current ratio is 6% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in CDN$
Results of stock price testing is that the stock price is probably reasonable and below the median and shown by the P/S Ratio test which is the only good test. However, all the other test point to risk in buying this stock. It is probably not the best stock to buy when Revenue, EPS, Book Value and Cash Flow is dropping and Dividends are declining and then flat.
Is it a good company at a reasonable price? The stock price would seem to be reasonable with the P/S Ratio test. I am not interested in buying a company when Revenue, EPS, Book Value and Cash Flow is dropping and Dividends are declining and then flat.
When I look at analysts’ recommendations, I find Strong Buy (3), and Buy (2). The consensus would be a Strong Buy. The 12 month stock price consensus is $3.63. This implies a total return of 78.13% with 76.21% from capital gains and 1.92% from dividends.
Last year when I look at analysts’ recommendations, I found Strong Buy (3), Buy (1) and Hold (1). The consensus was a Buy. The 12 months stock price was $3.02 ($2.35 US$). This implied 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. What happened was a loss of 1.48%, with a capital loss of 3.33% and dividends of 1.85%.
Last year I said that the current stock price of $2.70 was reasonable. I said that this company had reinvented itself a number of times. Analysts at that time expected that this company will not do as well over the next couple of years as it did in 2019. 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.
There is nothing recent on Stock Chase but last year analysts liked the company. However, the results in 2020 were not a good as expected in the end. Christopher Liew on Motley Fool says this stock is a strong buy for good potential returns. The executive summary on Simply Wall Street gives this stock 4 stars out of 5 and lists one risk. A writer on Simply Wall Street valued this stock at 2.89 in October 2019. The company announces on Cision their third quarterly results.
Quarterhill Inc is focused on the acquisition, management, and growth of companies in the intelligent transportation systems (ITS) and innovation and licensing industries. Its geographical segments are the United States, Canada, Chile, China, Korea, Singapore, Taiwan, Thailand, Ukraine, and the Rest of the world. 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 19, 2021 around 5 pm. Tomorrow on my other blog I will write about Blue Chips for November 2021.... learn more on Thursday, November 18, 2021 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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