Is it a good company at a reasonable price? The stock price is probably cheap. This company has gone threw many changes over the years. It is not a dividend growth company, which are the companies I am most interested in. Buying this company would be risky. It is hard to know where it will go to from here.
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 analysts expected an $0.08 loss, but the loss for 2021 was $0.19. They will probably do well in 2022 with an EPS of probably around $0.16. However, all the analysts expect earnings losses in 2023 and 2024. They took on debt in 2021. The Long Term Debt/Market Cap Ratio went from 0.00 to 0.37.
If you had invested in this company in December 2011, for $1,003.77 you would have bought 171 shares at $5.87 per share. In December 2021, after 10 years you would have received $189.81 in dividends. The stock would be worth $461.70. Your total return would have been $651.51.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $5.87 | $1,003.77 | 171 | 10 | $189.81 | $461.70 | $651.51 |
The dividend yields are moderate with dividend growth non-existent. The current dividend yield is moderate (2% to 4%) at 3.27%. The 5 year, 10 year and historical median dividend yields are also moderate at 2.41%, 3.00% and 2.41%. Dividends have been flat since 2018. They decreased the dividends in 2017 by 76%. They are probably not going to be a dividend growth company again anytime soon.
The Dividend Payout Ratios (DPR) are mostly non-calculable because of earnings losses and negative cash flow. The DPR for EPS for 2021 cannot be calculated due to earnings losses. The 5 year coverage also cannot be calculated for the same reason. They have had 4 years of earnings losses in the last 10 year. The DPR for Cash Flow per Share (CFPS) for 2021 cannot be calculated due to a negative cash flow for 2021. The 5 year coverage is 22%. The DPR for Free Cash Flow (FCF) cannot be calculated because of negative cash flow. The 5 year coverage is 25%.
Debt Ratios are good, but debt increased a lot in 2021. The current Long Term Debt/Market Cap Ratio is 0.37. The ratio is fine, but this ratio has spent a long time at or 0 until 2021. The Liquidity Ratio for 2021 is good at 2.87. The Debt Ratio for 2021 is good at 2.30. The Leverage and Debt/Equity Ratios for 2021 are 1.77 and 0.77 and are good.
The Total Return per year is shown below for years of 5 to 23 to the end of 2021 in CDN$. 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. |
|---|---|---|---|---|---|
| 2016 | 5 | -24.77% | 6.38% | 4.28% | 2.11% |
| 2011 | 10 | -5.44% | -4.93% | -7.47% | 2.54% |
| 2006 | 15 | 5.95% | 6.14% | 2.48% | 3.66% |
| 2001 | 20 | 3.40% | 1.05% | 2.35% | |
| 1998 | 23 | 4.81% | 2.59% | 2.22% |
The Total Return per year is shown below for years of 5 to 20 to the end of 2021 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. |
|---|---|---|---|---|---|
| 2016 | 5 | -23.90% | 7.74% | 5.60% | 2.14% |
| 2011 | 10 | -7.46% | -7.13% | -9.40% | 2.27% |
| 2006 | 15 | 4.30% | -1.69% | -4.08% | 2.39% |
| 2001 | 20 | 1.23% | -0.93% | 2.17% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 8.31, 12.97 and 14.11. The corresponding 10 year ratios are 9.25, 13.11 and 16.98. The corresponding historical ratios are negative and unusable. The current P/E Ratio is 9.56 based on a stock price of $1.53 and EPS estimate for 2022 of $0.16. The current ratio is between the low and median ratios of the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median. Note that EPS has recently be down graded from $0.21 to $0.16 for 2022.
I get a Graham Price of $2.95. The 10-year low, median, and high median Price/Graham Price Ratios are 0.56, 0.95 and 1.25. The current P/GP Ratio is 0.52 based on a stock price of $1.53. The current ratio is below the low of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.
I get a 10-year median Price/Book Value per Share Ratio of 0.95. The current P/B Ratio is 0.63 based on Book Value of $276M, Book Value per Share of $2.42 and a stock price of $1.53. The current ratio is 33% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap
I get a 10-year median Price/Cash Flow per Share Ratio of 10.99. The current P/CF Ratio is 5.34 based on Cash Flow estimate for 2022 of $32.6M, Cash Flow per Share of $0.29 and a stock price of $1.53. The current ratio is 51% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get an historical median dividend yield of 2.41%. The current dividend yield is 3.27% based on dividends of $0.05 and a stock price of $1.53. The current dividend yield is 36% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median dividend yield of 3.00%. The current dividend yield is 3.27% based on dividends of $0.05 and a stock price of $1.53. The current dividend yield is 9% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
The 10-year median Price/Sales (Revenue) Ratio is 2.31. The current P/S Ratio is 0.56 based on a stock price of $1.53, Revenue estimate for 2022 of $310M and Revenue per Share of $2.72. The current ratio is 76% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
Results of stock price testing is that the stock price is probably cheap. The P/S Ratio tests says the stock price is cheap. The dividend yield tests say cheap to reasonable. The problem is that dividends have been flat for sometime after dividend decreases. Other tests say either the price is cheap or reasonable.
When I look at analysts’ recommendations, I find Strong Buy (2), Buy (2) and Hold (1). The consensus would be a Strong Buy. The 12 month stock price consensus is $2.73. This implies a total return of 81.7% with 78.43% from capital gains and 3.27% from dividends based on a stock price of $1.53.
Analysts on Stock Chase seem to like this stock. Stock Chase gives this stock 3 stars out of 5. It is not on Money Sense list. Ambrose O'Callaghan on Motley Fool thinks this stock will rebound. Christopher Liew on Motley Fool thinks this stock is trading at a deep discount. The company put out a Press Release for their fourth quarter of 2021 results. The company put out a Press Release on their second quarter of 2022 results.
A Simply Wall Street report on Yahoo Finance is favourable. Simply Wall Street list 3 warnings of earnings are forecast to decline by an average of 114.2% per year for the next 3 years; unstable dividend track record; and large one-off items impacting financial 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 Wednesday, November 16, 2022 around 5 pm. Tomorrow on my other blog I will write about 0% in 30 Years .... learn more on Tuesday, November 15, 2022 around 5 pm.
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