03-11-2021, 12:56 PM
Franklin Wireless (FKWL) Analysis!
<!-- SC_OFF --><div class="md"><p>FKWL Analysis</p> <p>What does it do? Franklin Wireless provides wireless devices such as wirless broadband products using 4G and 5G and Internet of things connected decices and tracking devices. For example Franklin Wireless creates a car tracker that using 4g lte and also works as a wireless hotspot so people in gthe car have access to wifi and vehicle safety and diagnostic information. It also creates wireless routers which has helped cause a large increase in sales since the start of the pandemic for the company.</p> <p>Financials The revenues for the company increased from $36 million in 2019 to $181 million in 2020 the profits inthe same period increased from a loss of $1 million to $18 million in profit. The current P/e ratio is 10 and there free cash flow has increased from $2million to $54 million. That is a large increase and the share price has increased from $3 to $17.5 today. Thats only a 6x increase for a company that has increased its its revenues 5x has become hugely profitable this year and increased its cash flow position by 26x.</p> <p>Balance sheet - When analyzing a balance sheet I don’t really take into account intangibles as their value is subjective and the tangible assets have to be market down at a price of what could I sell it for. ofcourse I dont have a list of all the different assets so I’m just going to give their tangible assets a discount of around 75%. They say they have $16.9 million in assets and inventory I say its worth around $5 million. They have $16 million in recievables and $76 million in cash and dhort term investments thats about $97 million of liquidable cash that I would be able to get out of the business if I bought it and liquidated the company. The company has no debt so the bottom share price is worth around $7 a share minimum. However because its not got any debt this is not going to happen.</p> <p>Growth - The revenues and profits for this company are still increasing and the company is now creating 5g LTE equipment and the 5G market is only going to increase over the next few years. There is 1 analyst who is covering the stock and is estimating that the revenues and profits will start to decline coming to the end of this year I’m assuming this is because the expectation is we will start to come out of the pandemic and the demand for the products will not be as high. This is a fair estimate and after listening to the ceo in the last earnings call he said we expect the demand to stay high even as we start to come out of the pandemic. This is different than we expect the demand to continue to rise however but maybe I’m reading too much into that. The 1 analyst has a price target of $28. Which again is fair.</p> <p>What could happen? Based on everything even if the financials do not continue to rise the company is still undervalued. However if the companies revenues and profits continue to increase and the market cap gets over $750 million more analysts are going to start covering it and the stock will need to be moved into another market index such as the nasdaq. If this happens this year the company is gonna be showing year on year growth for 2 years and the price will increase rapidly as people will be paying a premium for the high growth and because there are much more investors who can access nasdaq stocks than thos who can access pink sheets aswell as the fact that it gives the company more legitamacy as their books need to be audited more thoroughly when entering an index like the nasdaq. If this happens I see the pe ratio increasing to 33 which is the industry average or even higher as it will have growth momentum.If the profit increases to $30 million for 2021 and it does enter the nasdaq the market cap should be around $1 billion with a share price of around $80 at least.</p> <p>I don’t think this is a likely scenerio for this year in my opinion however but even if theres only a 10% - 20% of this happening and its undervalued at its current price even if the revenues and profits stay the same I’m happy holding it as the risk reward ratio seems very attractive.</p> <p>Risks</p> <p>The ceo has recently been replaced after Mr Jyoung resigned on 27 January 2021. Kristina Kim who is a licenced attorney with extensive knowledge in global import and export and regulatory issues. In the last earnings call the ceo mentioned supply chain delays caused by the covid 19 pandemic and thanked the employees for being able to still fulfill all the customer orders on time regardless of the difficulties they faced without increasing their costs. I’m assuming that part of the cause of these delays was because of getting through customs and I’m also assuming the parts they’ve had difficulties importing are from china and the ongoing trade war between the USA and China are making it harder to import what they need and thats why Kristina Kim transitioned to the CEO position.</p> <p>Overall I think its a good buy in terms of the risk/reward ratio.</p> <p>I’m not a financial advisor and this is just my opinion.</p> <p>Disclosure - I am long FKWL</p> <p>Original post from <a href="/r/thevalueinvestor">r/thevalueinvestor</a></p> <p>I welcome any critisism to the analysis but remember opinions are like arseholes, everyone has one. So please if you do have an opinion give some valid reasoning and logic to back it up.</p> </div><!-- SC_ON --> submitted by <a href="https://www.reddit.com/user/GetRichSlowRetard"> /u/GetRichSlowRetard </a> <br/> <span><a href="https://www.reddit.com/r/investing/comments/m2bwr6/franklin_wireless_fkwl_analysis/">[link]</a></span> <span><a href="https://www.reddit.com/r/investing/comments/m2bwr6/franklin_wireless_fkwl_analysis/">[comments]</a></span>Kind Regards R
<!-- SC_OFF --><div class="md"><p>FKWL Analysis</p> <p>What does it do? Franklin Wireless provides wireless devices such as wirless broadband products using 4G and 5G and Internet of things connected decices and tracking devices. For example Franklin Wireless creates a car tracker that using 4g lte and also works as a wireless hotspot so people in gthe car have access to wifi and vehicle safety and diagnostic information. It also creates wireless routers which has helped cause a large increase in sales since the start of the pandemic for the company.</p> <p>Financials The revenues for the company increased from $36 million in 2019 to $181 million in 2020 the profits inthe same period increased from a loss of $1 million to $18 million in profit. The current P/e ratio is 10 and there free cash flow has increased from $2million to $54 million. That is a large increase and the share price has increased from $3 to $17.5 today. Thats only a 6x increase for a company that has increased its its revenues 5x has become hugely profitable this year and increased its cash flow position by 26x.</p> <p>Balance sheet - When analyzing a balance sheet I don’t really take into account intangibles as their value is subjective and the tangible assets have to be market down at a price of what could I sell it for. ofcourse I dont have a list of all the different assets so I’m just going to give their tangible assets a discount of around 75%. They say they have $16.9 million in assets and inventory I say its worth around $5 million. They have $16 million in recievables and $76 million in cash and dhort term investments thats about $97 million of liquidable cash that I would be able to get out of the business if I bought it and liquidated the company. The company has no debt so the bottom share price is worth around $7 a share minimum. However because its not got any debt this is not going to happen.</p> <p>Growth - The revenues and profits for this company are still increasing and the company is now creating 5g LTE equipment and the 5G market is only going to increase over the next few years. There is 1 analyst who is covering the stock and is estimating that the revenues and profits will start to decline coming to the end of this year I’m assuming this is because the expectation is we will start to come out of the pandemic and the demand for the products will not be as high. This is a fair estimate and after listening to the ceo in the last earnings call he said we expect the demand to stay high even as we start to come out of the pandemic. This is different than we expect the demand to continue to rise however but maybe I’m reading too much into that. The 1 analyst has a price target of $28. Which again is fair.</p> <p>What could happen? Based on everything even if the financials do not continue to rise the company is still undervalued. However if the companies revenues and profits continue to increase and the market cap gets over $750 million more analysts are going to start covering it and the stock will need to be moved into another market index such as the nasdaq. If this happens this year the company is gonna be showing year on year growth for 2 years and the price will increase rapidly as people will be paying a premium for the high growth and because there are much more investors who can access nasdaq stocks than thos who can access pink sheets aswell as the fact that it gives the company more legitamacy as their books need to be audited more thoroughly when entering an index like the nasdaq. If this happens I see the pe ratio increasing to 33 which is the industry average or even higher as it will have growth momentum.If the profit increases to $30 million for 2021 and it does enter the nasdaq the market cap should be around $1 billion with a share price of around $80 at least.</p> <p>I don’t think this is a likely scenerio for this year in my opinion however but even if theres only a 10% - 20% of this happening and its undervalued at its current price even if the revenues and profits stay the same I’m happy holding it as the risk reward ratio seems very attractive.</p> <p>Risks</p> <p>The ceo has recently been replaced after Mr Jyoung resigned on 27 January 2021. Kristina Kim who is a licenced attorney with extensive knowledge in global import and export and regulatory issues. In the last earnings call the ceo mentioned supply chain delays caused by the covid 19 pandemic and thanked the employees for being able to still fulfill all the customer orders on time regardless of the difficulties they faced without increasing their costs. I’m assuming that part of the cause of these delays was because of getting through customs and I’m also assuming the parts they’ve had difficulties importing are from china and the ongoing trade war between the USA and China are making it harder to import what they need and thats why Kristina Kim transitioned to the CEO position.</p> <p>Overall I think its a good buy in terms of the risk/reward ratio.</p> <p>I’m not a financial advisor and this is just my opinion.</p> <p>Disclosure - I am long FKWL</p> <p>Original post from <a href="/r/thevalueinvestor">r/thevalueinvestor</a></p> <p>I welcome any critisism to the analysis but remember opinions are like arseholes, everyone has one. So please if you do have an opinion give some valid reasoning and logic to back it up.</p> </div><!-- SC_ON --> submitted by <a href="https://www.reddit.com/user/GetRichSlowRetard"> /u/GetRichSlowRetard </a> <br/> <span><a href="https://www.reddit.com/r/investing/comments/m2bwr6/franklin_wireless_fkwl_analysis/">[link]</a></span> <span><a href="https://www.reddit.com/r/investing/comments/m2bwr6/franklin_wireless_fkwl_analysis/">[comments]</a></span>Kind Regards R