Monday, 3 March 2014

Fundamental Research – Fair Value Suggests A Near Double For IWG Stock

IWG.TSX.V

A recent report from Fundamental Research analyst Siddharth Rajeev calls IWG Technologies a BUY with a fair value of $0.40, almost double its current price share price.

In his report titled, “IWG Technologies Inc. – Q1 revenues up 10% YOY; in line with expectations”, Mr. Siddharth raises IWG’s FY2014 revenue and EPS estimates due to the stronger US$, industry wide growth, and the launch of a new product in Q2-2014. He highlights that with $1.19 million in cash, $2.88 million in working capital, and a low debt to capital of 6.9%, IWG’s balance sheet continues to be strong and healthy.

Several other key highlights in the report include:

Revenue forecasts rose for FY2014 (Sept.30) from $7.21 million to $7.50 million, while Fundamental estimates FY2015 coming in at $8.16 million.

Gross margins in the first quarter of 2014 improved to 51%, up from 49% in Q1 2013. Fundamental anticipates further margin increase in the second half of the year, as revenues are typically higher in the second half. FY2014 estimates have been projected at 54%.

Net income forecasts for FY2014 have been raised from $1.02 million to $1.18 million. This is largely due to higher revenue, and a slight drop in R&D expense forecasts. FY2015 estimates have also been revised to $1.24 million versus the previous estimate of $1.18 million.

Mr. Siddharth further notes that IWG is highly dependent on the overall health of the aerospace industry. With approximately 9,000-10,000 business aircrafts being delivered until 2022, he believes that IWG will demonstrate strong growth over the next 8 to 10 years and explains that with approximately 75% of sales being done in US$, IWG will continue to benefit from the strong US$ and will continue to see growth in FY2014/2015.


Shares Outstanding: 37.7 million
Shares Fully Diluted: 39.7 million