Quant Snapshot: Norsat (TSX:NII)

Life amid the rubble. When Amiee Chan, an engineer who had been laid off and then rehired by Norsat, took over midway through the last decade, the company was in a bad way. The Richmond, BC based maker of satellite ground equipment, which commanded a market cap of more than a billion dollars in 2000, was on the verge of kissing its decades old history goodbye. Chan buckled down, cut costs, and slowly increased sales. After the company earned $1.4 million in 2007 on revenues of $17 million, Chan was named Ernst & Young’s Turnaround Entrepreneur of The Year. The drama has abated at Norsat, but the company continues to grow, earning nearly $3 million, or $.08 cents a share in 2009 on revenues over $21 million. Does Norsat now represent value for investors? We break down the numbers in an updated Quant Snapshot.

1. Price to sales: 1.64 x Sales

As of June 30th, 2010 (Q2, 2010) Norsat had 53.4 million shares
outstanding.The price as of October 4, 2010 was $.66 This gives The Company a market capitalization of $35.2 million. In the trailing four quarters, sales totaled $21.36 million.

2. Cash to Market Cap: 16.1%

As of Q2, 2010, Norsat’s reported cash and short term investments was $5.67 million. The Company’s Market Cap, as of October 4th was $35.2 million.

3. Debt to market Cap: $0

As of June 30th, 2010 (Q2, 2010) Norsat had no long term debt.

4. Trailing Three year growth rate: 12.6%

Norsat’s sales were $14.86 million in 2006. Sales grew to $21.16 million
in 2009.

5. Enterprise Value to Sales: 1.38 x Sales

Enterprise Value as of Q2, 2010 is $29.53 million, based on a
market cap of $35.2 million plus zero long term debt, minus cash
and short term investments of of $5.67 million. Sales for the trailing four quarters totaled $21.36 million.

All financial information about Norsat is gleaned from
their filings with the System for Electronic Document Analysis and
Retrieval (SEDAR)
All calculations are based on The Company’s closing share price as of
close October 4th, 2010: $.66
Sales from trailing four quarters: $21.36 million
Cash and short term investments as of June 30, 2010 (Q2, 2010): $5.67 million
Shares outstanding: $53.4 million.