Introducing Telular, A Stock With A Generous Yield


INTRODUCTION:

Telular (WRLS) released its first quarter results on January 31. Management exceeded expectations on both top and bottom lines but cash levels fell short due to reasons discussed later.

We have been writing about Telular on SA since August 2010 when the stock was at $2.31.  The stock closed at $10.56 at the time of this writing yielding a generous 4.5% and remains a compelling story not widely followed by analysts.

The goal of this article is to give the reader a basic understanding of Telular’s businesses and potential from an investor’s viewpoint. The discussion includes:

  • An overview of each business & market potential.
  • Financial trends
  • Valuation
  • Concerns & known risks
  • Conclusion

A complete set of updated detailed financial data and projections reflected in this article is found here.

BUSINESS SEGMENTS:

Telguard: Provides primary and backup alarm communication solutions for residential, small business, financial, commercial and fire system markets. These products transmit data from virtually all security and fire systems to central stations using the cellular network.

Telguard accounts for the bulk of Telular’s revenue (54% in Q1). Telguard’s sales guidance is 30,000 to 40,000 units each quarter during fiscal year 2013. Telular sold approximately 37,300 Telguard units and activated 35,400 new Telguard subscribers in Q1. The unit ASP (average selling price) runs about $137.

Average sales in the 2007 timeframe exceeded 50,000 per quarter as reflected in the steep rise in subscribers shown in the graph below.
…Click here to continue to full article…

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