Versant Partner's Justin Kew still lukewarm on Wireless Matrix

Versant Partners analyst Justin Kew says Wireless Matrix’s Q4 2012 were a mild surprise to the upside, but the company is already trading at a healthy valuation relative to its peers.

Wireless Matrix (TSX:WRX) yesterday reported its fiscal 2012 results. The company lost (US) $2.03-million on revenues of $33.3-million, compared with a loss of $3.5-million on a topline of $34.7-million the previous year.

Wireless Matrix CFO and acting CEO Maria C. Izurieta believes things are on the upswing: “We will remain focused growing our subscriber base,” she said, adding that the company would like to improve its “…returns to shareholders by being innovative in both of our product lines: FleetOutlook for the mobile resource management market and in the satellite data communications market by developing a next-generation broadband satellite solution to retain and expand our current satellite business.”

Versant Partners analyst Justin Kew says the results for Wireless Matrix’s Q4 were better than he expected. He says the primary driver for the company’s recent growth is increased satellite revenue, which he thinks looks more and more like a viable business. Still, says the Versant analyst, better numbers are necessary to support the company’s current valuation, which is a healthy 8.2 times his projections for the company’s fiscal 2013 EV/EBITDA and 12.0 times fiscal 2013 P/E. In a research update to clients today, Kew maintained his NEUTRAL recommendation and a $0.75 target price on Wireless Matrix’s stock.

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Wireless Matrix got its start in 1991, first in the satellite communications business, later developing broad wireless expertise supplying corporate internet access and data services to businesses. In 2006, the company applied what it had learned to the fleet management space with its GPS tracker FleetOutlook, a vehicle tracking and fleet management reporting application. Revenue, however has flatlined; the $33.3-million the company did in fiscal 2012 was slightly worse than 2008’s $35.56 million. Earlier this year J. Richard Carlson, who had been the CEO of Wireless Matrix since 2004, stepped down and the company’s board was shuffled, with Izurieta assuming the role of interim CEO.

At press time, share of Wireless Matrix were up 6.6% to $.65 cents.

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