Franklin Wireless Corp (NASDAQ: FKWL)

Sector: Technology Industry: Communication Equipment CIK: 0000722572
Market Cap 51.48 Mn
P/B 1.47
P/E -437.00
P/S 1.13
ROIC (Qtr) -4.92
Div Yield % 1.83
Rev 1y % (Qtr) -4.34
Total Debt (Qtr) 1.29 Mn
Debt/Equity (Qtr) 0.04

About

Price action

Investment thesis

Bull case

  • Healthy cash reserves of 13.38M provide 36.01x coverage of short-term debt 371550, demonstrating strong liquidity position and minimal refinancing risk.
  • Operating cash flow of (2.32M) provides exceptional 19.18x coverage of minority interest expenses (120739), showing strong core operations.
  • Strong tangible asset base of 52.15M provides 40.28x coverage of total debt 1.29M, indicating robust asset backing and low credit risk.
  • Tangible assets of 52.15M provide exceptional 449.84x coverage of deferred revenue 115920, showing strong service capability backing.
  • Operating cash flow of (2.32M) fully covers other non-current liabilities (115920) by 19.97x, showing strong long-term stability.

Bear case

  • Operating cash flow of (2.32M) barely covers its investment activities of 1.48M, with a coverage ratio of -1.56, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of 1.48M provide weak support for R&D spending of 4.03M, which is 0.37x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Operating cash flow of (2.32M) provides insufficient coverage of deferred revenue obligations of 115920, which is -19.97x, raising concerns about future service delivery capabilities.
  • The company's operating cash flow of (2.32M) shows concerning coverage of stock compensation expenses of 263209, with a -8.80 ratio indicating potential earnings quality issues.
  • High receivables of 6.78M relative to inventory of 995364 (6.81 ratio) suggests aggressive credit terms or collection difficulties, potentially masking revenue quality issues.

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. 306.02 Bn 29.63 5.30 28.09 Bn
2 MSI Motorola Solutions, Inc. 63.92 Bn 30.21 5.65 9.81 Bn
3 HPE Hewlett Packard Enterprise Co 35.43 Bn -600.50 1.03 22.37 Bn
4 UI Ubiquiti Inc. 33.47 Bn 42.27 12.14 0.17 Bn
5 CIEN Ciena Corp 33.16 Bn 268.82 6.95 1.58 Bn
6 LITE Lumentum Holdings Inc. 25.28 Bn 224.75 13.73 3.28 Bn
7 ASTS AST SpaceMobile, Inc. 19.88 Bn -65.43 1,072.82 0.72 Bn
8 ZBRA Zebra Technologies Corp 12.46 Bn 24.33 2.37 2.32 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.72 2.22
EV to Cash from Ops. EV/CFO -16.47 10.78
EV to Debt EV to Debt 29.46 25.00
EV to EBIT EV/EBIT -226.72 32.18
EV to EBITDA EV/EBITDA -40.16 10.60
EV to Free Cash Flow [EV/FCF] EV/FCF -13.20 -3.32
EV to Market Cap EV to Market Cap 0.74 1.17
EV to Revenue EV/Rev 0.84 27.87
Price to Book Value [P/B] P/B 1.47 5.35
Price to Earnings [P/E] P/E -437.00 2.67
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 0.91
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 -25.01
Dividend per Basic Share Div per Share (Qtr) 0.04 0.22
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) -16.33 4.46
Interest Coverage Interest Coverage 0.00 -12.93
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -181.32 -73.93
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -8.47 463.06
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 1.39
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 96.31 204.95
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 80.09 -1.04
EBIT Growth (1y) % EBIT 1y % (Qtr) 95.84 238.24
EBT Growth (1y) % EBT 1y % (Qtr) 95.84 173.82
EPS Growth (1y) % EPS 1y % (Qtr) 96.30 8.68
FCF Growth (1y) % FCF 1y % (Qtr) -141.78 20.80
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 115.24 41.66
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.85 0.76
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.03
Cash Ratio Cash Ratio (Qtr) 0.96 1.20
Current Ratio Curr Ratio (Qtr) 3.38 2.69
Debt to Equity Ratio Debt/Equity (Qtr) 0.04 0.43
Interest Cover Ratio Interest Cover Ratio 0.00 -12.93
Times Interest Earned Times Interest Earned 0.00 -12.93
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 1.70 -40.66
EBIT Margin % EBIT Margin % (Qtr) -0.37 -52.32
EBT Margin % EBT Margin % (Qtr) -0.37 -59.46
Gross Margin % Gross Margin % (Qtr) 19.20 39.35
Net Profit Margin % Net Margin % (Qtr) -0.30 -60.72