Franklin Wireless Corp (NASDAQ: FKWL)

Sector: Technology Industry: Communication Equipment CIK: 0000722572
Market Cap 38.82 Mn
P/B 1.10
P/E 207.50
P/S 0.98
ROIC (Qtr) -6.81
Div Yield % 0.96
Rev 1y % (Qtr) -33.09
Total Debt (Qtr) 1.20 Mn
Debt/Equity (Qtr) 0.03
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About

Investment thesis

Bull case

  • Healthy cash reserves of 9.36M provide 26.61x coverage of short-term debt 351829, demonstrating strong liquidity position and minimal refinancing risk.
  • Strong tangible asset base of 51.80M provides 43.33x coverage of total debt 1.20M, indicating robust asset backing and low credit risk.
  • Tangible assets of 51.80M provide exceptional 426.87x coverage of deferred revenue 121354, showing strong service capability backing.
  • Operating cash flow of (9.14M) fully covers other non-current liabilities (121354) by 75.34x, showing strong long-term stability.
  • Retained earnings of 25.60M provide full 30.34x coverage of long-term debt 843684, indicating strong internal capital position.

Bear case

  • Investment activities of (920442) provide weak support for R&D spending of 3.88M, which is -0.24x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Operating cash flow of (9.14M) provides insufficient coverage of deferred revenue obligations of 121354, which is -75.34x, raising concerns about future service delivery capabilities.
  • The company's operating cash flow of (9.14M) shows concerning coverage of stock compensation expenses of 180010, with a -50.79 ratio indicating potential earnings quality issues.
  • High receivables of 10.36M relative to inventory of 2.11M (4.91 ratio) suggests aggressive credit terms or collection difficulties, potentially masking revenue quality issues.
  • Free cash flow of (9.97M) provides weak coverage of capital expenditures of 825665, with a -12.07 ratio suggesting additional external financing needs for growth initiatives.

Geographical Breakdown of Revenue (2015)

Peer comparison

Companies in the Communication Equipment
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 CSCO Cisco Systems, Inc. 305.09 Bn 27.54 5.17 30.09 Bn
2 MSI Motorola Solutions, Inc. 76.26 Bn 35.40 6.53 9.63 Bn
3 CIEN Ciena Corp 42.86 Bn 347.51 8.99 1.58 Bn
4 UI Ubiquiti Inc. 42.08 Bn 47.35 14.16 0.11 Bn
5 LITE Lumentum Holdings Inc. 41.73 Bn 165.86 19.82 3.32 Bn
6 HPE Hewlett Packard Enterprise Co 28.79 Bn 7.76 1.03 22.37 Bn
7 ASTS AST SpaceMobile, Inc. 22.73 Bn -74.80 1,226.44 0.72 Bn
8 ZBRA Zebra Technologies Corp 13.26 Bn 31.65 2.46 2.66 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.50 2.66
EV to Cash from Ops. EV/CFO -2.92 14.95
EV to Debt EV to Debt 22.36 37.29
EV to EBIT EV/EBIT 5,128.90 201.55
EV to EBITDA EV/EBITDA -14.99 9.12
EV to Free Cash Flow [EV/FCF] EV/FCF -2.68 66.04
EV to Market Cap EV to Market Cap 0.69 1.10
EV to Revenue EV/Rev 0.67 32.52
Price to Book Value [P/B] P/B 1.10 6.31
Price to Earnings [P/E] P/E 207.50 12.21
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 0.64
Dividend Payout Ratio % Div Payout % (Qtr) 200.00 -19.58
Dividend per Basic Share Div per Share (Qtr) 0.04 0.23
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) -4.73 5.02
Interest Coverage Interest Coverage 0.00 -10.88
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -449.94 -65.39
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -53.79 457.29
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 1.57
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 108.51 67.92
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 29.34 -9.76
EBIT Growth (1y) % EBIT 1y % (Qtr) 100.20 67.42
EBT Growth (1y) % EBT 1y % (Qtr) 100.20 -72.72
EPS Growth (1y) % EPS 1y % (Qtr) 110.53 5.66
FCF Growth (1y) % FCF 1y % (Qtr) -193.32 -2.41
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 16.59 36.14
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.75 0.75
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.03
Cash Ratio Cash Ratio (Qtr) 0.67 1.34
Current Ratio Curr Ratio (Qtr) 3.39 2.99
Debt to Equity Ratio Debt/Equity (Qtr) 0.03 0.46
Interest Cover Ratio Interest Cover Ratio 0.00 -10.88
Times Interest Earned Times Interest Earned 0.00 -10.88
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 2.20 -41.18
EBIT Margin % EBIT Margin % (Qtr) 0.01 -52.62
EBT Margin % EBT Margin % (Qtr) 0.01 -59.46
Gross Margin % Gross Margin % (Qtr) 19.00 38.53
Net Profit Margin % Net Margin % (Qtr) 0.50 -60.82