On Friday, Webtech Wireless (TSX:WEW) reported its fiscal 2011 results. The company’s revenue came in at $41.4-million, almost exactly the same as 2010’s number but, as the company pointed out, was actually 7% to the upside if currency had remained constant. Webtech also trimmed its losses to $7.3 million from 2010’s $15.3 million.
Versant analyst Tom Liston was impressed with the way Webtech Wireless ended the year, noting that both revenue and earnings beat his targets. In a research update Friday, Liston reiterated his Buy Rating on the stock and his $.60 cent twelve-month target.
Vancouver’s Webtech Wireless, which was founded 1999, spiked to $7 in April of 2007 on the promise that its GPS tracking of transit and commercial fleets could bring measurable cost reductions for large customers. But the company’s shares have languished in the time since, as losses piled up and patent disputes made investors jittery.
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While its share price plummeted, Webtech Wireless expanded through acquisition, notably adding Toronto based Grey Island Systems in October of 2009. The acquisition did nothing to slow the stock’s steady descent, but the price Webtech paid -approximately $38 million- was arguably inexpensive for a company posting a nine month trailing revenue number of $16.62 million and possessing more than $11 million cash.
Liston says the negativity on Webtech may have hammered the company’s valuation past a reasonable level. He points out that the NextBus business Webtech acquired from Grey Island generated $8.4 million over the last 12 months and grew 26.2%. Liston believes this business alone should be valued somewhere between $18.5 million and $33.6 million because it is “a strategic business and should command a healthy valuation.” Yet the entire enterprise value of Webtech Wireless is just over $30 million, which he says implies that the rest of the company, which generated $33 million in revenue in the past year, is worth just $10-million.
At press time, shares of Webtech Wireless were up 4.7% to $.335 cents.