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Aastra Technologies(TSX:AAH)is in the telecom equipment industry and closed today at $22.78 per share. With 14.03 million shares outstanding, the market capitalization is $320 million. Cash and short-term investments total $104 million, while debt is just $23 million. So...enterprise value is: 320 - 104 + 23 = $238 million.
Cashflow has been impressive. The past 5 years, operating cashflow has averaged $59 million, while capital expenditures have averaged only $14 million. So that's about $45 million in free cashflow annually. Not a bad return on $238 million dollar investment!
A lot of the free cash has been used to make acquisitions and revenues have grown from $500 million in 2005 to $833 million for 2009. However, management has been pretty good at returning some cash to the shareholders, buying back about 20% of the outstanding shares over the past few years and paying a dividend of 20 cents per share quarterly for a yield of 3.4%.
So cash generation and utilization have been good, especially relative to its current enterprise value.
On top of that the balance sheet looks fine. Net current assets after deducting ALL liabilities (Graham's net-net) are $9.78 per share.
This site is all about stocks that are cheap relative to cash and assets, and Aastra fits the bill.
Be sure to your own due diligence before making any investments. And of course, I own shares in Aastra.
Saturday, September 11, 2010
Wednesday, February 3, 2010
Chartwell Technology
Chartwell released its year end numbers. They've discontinued their Poker community and delayed "indefinitely" their Bingo community launch. So sounds like the company has bailed on some losing projects. Not a good reflection on management but I guess everyone is a Monday morning quarterback. While the reclassification makes the numbers a little harder to follow, it appears the company burned through $342K last quarter. This is based on the fact at end of Q3 they showed they were down $1,004K for the year, and at the end of Q4 they were down $508K. So that's a gain of $495K in cash; however, the company converted $837K in investments into cash this quarter, so the loss would be the $837K gained on the sale of investments less what remains, the $495K. So that's not so good. I prefer to see my companies cashflow positive.
Quarterly revenue was down both on a year-over-year and sequential basis. The company claimed a small profit of 1 cent per share for the quarter on its continuing operations, and a 2 cent loss per share including discontinued operations.
The balance sheet remains strong with $19 million in cash and little debt, which works out to around $1 per share. On that basis, despite the weak quarter, I think Chartwell, at $1.10, still represents good value and I continue to hold my shares.
Quarterly revenue was down both on a year-over-year and sequential basis. The company claimed a small profit of 1 cent per share for the quarter on its continuing operations, and a 2 cent loss per share including discontinued operations.
The balance sheet remains strong with $19 million in cash and little debt, which works out to around $1 per share. On that basis, despite the weak quarter, I think Chartwell, at $1.10, still represents good value and I continue to hold my shares.
Saturday, January 23, 2010
Goodfellow Update
Goodfellow posted a good first quarter. Revenue was down slightly, but management reduced expenses even more, improving margins substantially, from 0.9% net in Q12009 to 1.9% in Q12010. Quarterly earnings per share doubled from 12 cents to 24 cents. Cashflow from operations was positive before changes in non-cash working capital, but substantially negative after. Overall, including investing cashflows, the company used $8.4 million dollars, financed by bank debt. However, this was largely due to a seasonal increase in inventory.
Goodfellow remains good value at its current price.
Goodfellow remains good value at its current price.
Thursday, January 21, 2010
Update on Caldwell Partners (CWL.A)
Caldwell released their first quarter results. The company burned through another $677K, leaving $9.4 million in cash and securities. Revenue increased slightly, but expenses increased more. Management continues to claim this is just them shoring up to take advantage of the recovery. I hope that's true. The company remains good value on paper, but time will tell if this a value trap or not. I continue to hold my shares.
Miranda Technologies (MT)
Miranda Technologies (TSX:MT) is another stock that shows up on our value screens. Miranda "develops, manufactures and markets high-performance hardware and software for the television broadcast industry. Its solutions are purchased by content creators, broadcasters, specialty channels and television service providers to enable and enhance the transition to a complex multi-channel digital and HD broadcast environment." According to the latest balance sheet, MT has $48 million in cash, $23 million in accounts receivable and $17 million in inventories. Property, plant and equipment equal $30 million. Applying some rough Graham mutiples (discussed previously) this gives us a liquidating value of around $85 million.
With the current share price of $5 against 22 million outstanding shares, that's a market cap of $110 million. Total liabilities are $37 million. So in theory you could buy the company outright for $147 million and liquidate it for $85 million. Obviously, this would be a stupid thing to do, but it does indicate that an investment in MT has some downside protection.
However, in the case for MT, the relatively cheap price vs. assets is only a bonus. The primary reason we like MT is that it has been a great cashflow generator. Cash flow from Operations over the past 5 full fiscal years (including changes in non-cash working capital) have averaged $21 million per year over the past 5 years; meanwhile capex has averaged only $3 million. That's a free cash flow of around 80 cents per share, on average, over the past 5 years. So far in 2009 the company remains cashflow positive at just under $2 million through Q3, despite the recessionary environment.
I profess no special knowledge -- actually, make that no knowledge at all -- about the future of MT's industry. Perhaps the recent glut of cash is a one-time thing driven by conversion of existing analog equipment to digital. Probably this is something a more enterprising investor should look into. But since I have a full time job and a family, it's not always possible to spend the time researching details such as this. Instead I assume that if that is indeed the case, that MT is facing terrible headwinds, then this fact is most likely already priced into the stock. After all, it is trading cheap by almost any standard, so the market is certainly pricing in a poor outlook. But, as Ben Graham and his followers have demonstrated time and time again, a diversifed portfolio of stocks that trade cheaply relative to their net asset value and past cashflow can deliver healthy returns. When the forecasted bad news becomes reality, the stock doesn't get hit much, it's already beaten down. But if there is any positive news, then the stock can come alive and increase substantially.
I do own shares in MT. This is not a recommendation that you purchase shares in MT. Please verify all the facts in this article yourself and consult an investment professional before making any purchases. As an amateur investor, I don't know if I have to put this stuff in or not but I figure better safe than sorry!
With the current share price of $5 against 22 million outstanding shares, that's a market cap of $110 million. Total liabilities are $37 million. So in theory you could buy the company outright for $147 million and liquidate it for $85 million. Obviously, this would be a stupid thing to do, but it does indicate that an investment in MT has some downside protection.
However, in the case for MT, the relatively cheap price vs. assets is only a bonus. The primary reason we like MT is that it has been a great cashflow generator. Cash flow from Operations over the past 5 full fiscal years (including changes in non-cash working capital) have averaged $21 million per year over the past 5 years; meanwhile capex has averaged only $3 million. That's a free cash flow of around 80 cents per share, on average, over the past 5 years. So far in 2009 the company remains cashflow positive at just under $2 million through Q3, despite the recessionary environment.
I profess no special knowledge -- actually, make that no knowledge at all -- about the future of MT's industry. Perhaps the recent glut of cash is a one-time thing driven by conversion of existing analog equipment to digital. Probably this is something a more enterprising investor should look into. But since I have a full time job and a family, it's not always possible to spend the time researching details such as this. Instead I assume that if that is indeed the case, that MT is facing terrible headwinds, then this fact is most likely already priced into the stock. After all, it is trading cheap by almost any standard, so the market is certainly pricing in a poor outlook. But, as Ben Graham and his followers have demonstrated time and time again, a diversifed portfolio of stocks that trade cheaply relative to their net asset value and past cashflow can deliver healthy returns. When the forecasted bad news becomes reality, the stock doesn't get hit much, it's already beaten down. But if there is any positive news, then the stock can come alive and increase substantially.
I do own shares in MT. This is not a recommendation that you purchase shares in MT. Please verify all the facts in this article yourself and consult an investment professional before making any purchases. As an amateur investor, I don't know if I have to put this stuff in or not but I figure better safe than sorry!
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