Webtech Wireless may be a “prime takeover candidate”, says PI’s Sangha

PI analyst Pardeep Sangha points to an appealing valuation; despite having $18.4-million in annual recurring revenue, Webtech Wireless trades at an enterprise value of just $27.3-million.

After a bounceback year in 2013, Webtech Wireless (TSX:WEW) could make more acquisitions to accelerate its growth, or could itself be taken over, says PI analyst Pardeep Sangha.

This morning before market, Webtech reported its Q4 and fiscal 2013 results. For the year , the company posted adjusted EBITDA of 2.2-million on revenue of $30.1-million. While the topline was a mere 4% higher than 2012’s number, Webtech’s bottom line doubled.

CEO Scott Edmonds characterized the year.

“Our product suite, led by our new Android solutions; our channel strategy, anchored by AT&T in the U.S. and by Bell in Canada; and our focus on our three chosen verticals of winter maintenance, transport, and oil and gas service fleets are all aligned at achieving our business goal of acquiring and retaining recurring revenue,” he said.

Sangha points to an appealing valuation; despite having $18.4-million in said annual recurring revenue, Webtech Wireless trades at an enterprise value of just $27.3-million. The stock, he notes, is currently trading at a 0.8x EV/Sales multiple and a 9.9x EV/EBITDA multiple of his fiscal 2014 estimates. The PI analyst does not yet have a price target or rating for the company, but the stock is on his Technology Watchlist.

Founded in 1999, Vancouver-based WebTech Wireless is a telematics location-based service provider that develops GPS vehicle tracking and telematics solutions.

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