Telular (WRLS) Revenue vs diluted shares by D Klein 07/21/09

Going on the same theme I used in my last blog on LVLT I decided to take a look at Telular through the same lens.  Below is the raw data per the numbers I publish on the investor exchanges web site.  The numbers exclude discontinued operations.

Fiscal Year Diluted Shares Yr end Stock Pr. Rev. per Share Price to Revenue
2005 16,306 $3.33 $1.43 2.33
2006 22,854 $3.65 $1.95 1.87
2007 22,822 $6.85 $3.22 2.13
2008 22,683 $1.32 $2.92 0.45

Diluted shares in thousands.

Similar to LVLT the stock went off a cliff in 2008, again in part due to the economic crisis, but mostly due to the disappointment in generating growth after Sunset ended.  Based on what we know today FY2009 revenue per diluted share should bottom barring any surprise and then start an upward trend IMO.  The stock price has rebounded quite a bit from the $1.32 shown above to about 2.25 as of this writing.  Not surprising considering the stock buy back program, and I think the price to revenue was overdone at .45 shown above.  Add to this the company has no debt and a pristine balance sheet, albeit small.

Revenue per share in 2009 will still be higher than FY2006 when the stock traded higher.  The difference being in 2006 expectations were high for continued revenue growth (think Sunset) so management needs to show the company is back on track for increased revenue growth going forward.  Based on the historical data above there seems to be more upside from here assuming no negative surprises IMO.

I think the stock price is fairly valued today but does have room to grow even if revenue grows at a modest rate.  The company cannot or does not want to give overall revenue guidance which will always be a drag on the stock.  Better than expected top line growth will bode well for the investor.  Earnings should be out in about a week or so followed by a conference call.  Hopefully management will provide more color on the revenue picture.  As I said in my last blog on Telular, the stock is speculative, given any PR shock could move the stock quite a bit given the small size of the company (+ or –) as the outstanding shares continue to shrink from the buyback program.  I think management is moving in the right direction, especially given the economic climate, so I don’t expect much downside risk from here, but this stock is difficult to analyze given the lack of visibility.


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