Optical Cable Corp (NASDAQ: OCC)

Sector: Technology Industry: Communication Equipment CIK: 0001000230
Market Cap 35.97 Mn
P/B 2.18
P/E -24.72
P/S 0.49
ROIC (Qtr) -1.67
Div Yield % 0.00
Rev 1y % (Qtr) 1.76
Total Debt (Qtr) 8.20 Mn
Debt/Equity (Qtr) 0.50

About

Price action

Investment thesis

Bull case

  • Strong tangible asset base of 39.58M provides 4.83x coverage of total debt 8.20M, indicating robust asset backing and low credit risk.
  • Robust free cash flow of 1.10M exceeds capital expenditure of 317205 by 3.46x, indicating strong organic growth funding capability.
  • Tangible assets of 39.58M provide robust 21.88x coverage of other current liabilities 1.81M, indicating strong asset backing.
  • Operating cash flow of 1.41M provides strong 57.28x coverage of tax liabilities 24688, showing excellent fiscal position.
  • Operating cash flow of 1.41M provides strong 25.99x coverage of operating expenses 54399, showing operational efficiency.

Bear case

  • Operating cash flow of 1.41M barely covers its investment activities of (317205), with a coverage ratio of -4.46, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • With cash reserves of 237508 against inventory of 19.80M, the 0.01 cash-to-inventory ratio suggests potential liquidity risks if inventory turnover slows, particularly concerning given current supply chain volatilities.
  • The company's operating cash flow of 1.41M shows concerning coverage of stock compensation expenses of 386639, with a 3.66 ratio indicating potential earnings quality issues.
  • Operating earnings of (419281) show weak coverage of depreciation charges of 804513, with a -0.52 ratio indicating high capital intensity and potential reinvestment needs.
  • Free cash flow of 1.10M represents just -0.38x of debt issuance (2.90M), suggesting concerning reliance on leverage rather than internal cash generation for growth.

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 1.11 2.22
EV to Cash from Ops. EV/CFO 31.54 10.78
EV to Debt EV to Debt 5.44 25.00
EV to EBIT EV/EBIT -106.36 32.18
EV to EBITDA EV/EBITDA 117.21 10.60
EV to Free Cash Flow [EV/FCF] EV/FCF 40.66 -3.32
EV to Market Cap EV to Market Cap 1.24 1.17
EV to Revenue EV/Rev 0.61 27.87
Price to Book Value [P/B] P/B 2.18 5.35
Price to Earnings [P/E] P/E -24.72 2.67
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.00 0.91
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 -25.01
Dividend per Basic Share Div per Share (Qtr) 0.00 0.22
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 4.46
Interest Coverage Int. cover (Qtr) -0.42 -12.93
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 14.60 -73.93
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -2.76 463.06
Dividend Growth (1y) % Div 1y % (Qtr) 0.00 1.39
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 85.90 204.95
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 115.32 -1.04
EBIT Growth (1y) % EBIT 1y % (Qtr) 86.13 238.24
EBT Growth (1y) % EBT 1y % (Qtr) 66.00 173.82
EPS Growth (1y) % EPS 1y % (Qtr) 66.67 8.68
FCF Growth (1y) % FCF 1y % (Qtr) 189.29 20.80
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 24.14 41.66
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 1.82 0.76
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.03
Cash Ratio Cash Ratio (Qtr) 0.01 1.20
Current Ratio Curr Ratio (Qtr) 1.83 2.69
Debt to Equity Ratio Debt/Equity (Qtr) 0.50 0.43
Interest Cover Ratio Int Coverage (Qtr) -0.42 -12.93
Times Interest Earned Times Interest Earned (Qtr) -0.42 -12.93
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 0.50 -40.66
EBIT Margin % EBIT Margin % (Qtr) -0.57 -52.32
EBT Margin % EBT Margin % (Qtr) -1.95 -59.46
Gross Margin % Gross Margin % (Qtr) 30.90 39.35
Net Profit Margin % Net Margin % (Qtr) -2.00 -60.72