Photon Control Inc is an attractive growth stock
07.04.2015 • About Photon Control Inc (
$PHO) • By InTwits
Photon Control Inc is a fast-growing stock in Industrial industry. Its revenue performance, profitability and healthy financial model stands it out vs. other public companies on the market.
Growth story
Photon Control Inc showed fast growth in the last financial year. The company's revenue surged on 21.9% in FY2014. The growth also happened in EBITDA of 44.4% for the same period.
If we look for the longer period the company showed fast revenue growth of 22.3% from 2011 to 2014 annually. EBITDA surged on 87.7% from 2011 to 2014 annually.
Photon Control Inc ($PHO) financials for the last 5 years
| mln. CAD | 2010 | 2011 | 2012 | 2013 | 2014 |
|---|
| Revenue | 13 | 11 | 11 | 17 | 21 |
|---|
| Revenue growth, % | | -13.5% | -8.6% | 64.3% | 21.9% |
|---|
| Gross margin, % | 42.7% | 38.6% | 37.1% | 42.3% | 48.2% |
|---|
| SG&A, % | | | 17.4% | 13.1% | |
|---|
| EBITDA | 3 | 1 | 2 | 4 | 6 |
|---|
| EBITDA growth, % | | -70.1% | 98.6% | 130.6% | 44.4% |
|---|
| EBITDA margin, % | 23.5% | 8.12% | 17.6% | 24.8% | 29.3% |
|---|
| Net Income | 3 | 5 | 3 | 3 | 5 |
|---|
| Net Income margin, % | 20.5% | 40.5% | 28.9% | 20.2% | 24.0% |
|---|
| |
| CAPEX | 0 | 0 | 0 | 0 | 0 |
|---|
| CAPEX/Revenue, % | 0.754% | 0.728% | 0.185% | 0.237% | 0.425% |
|---|
| Debt | 0 | 0 | 0 | 0 | 0 |
|---|
| Cash | 1 | 1 | 4 | 6 | 14 |
|---|
| Net Debt/EBITDA | -0.3x | -1.0x | -1.9x | -1.4x | -2.3x |
|---|
| |
| ROIC, % | 92.6% | 10.1% | 21.0% | 44.4% | 38.0% |
|---|
| ROE, % | 88.3% | 67.9% | 28.2% | 24.7% | 26.8% |
|---|
Profitability and return on investment
EBITDA growth was partly attributed to margin expansion. The company showed fast EBITDA margin growth of 4.50 pp from 24.8% to 29.3% in 2014. If we look for the longer period the company's EBITDA margin surged on 21.2 pp from 8.10% in 2011 to 29.3% in 2014.
We call Photon Control Inc an attractive growth stock as together with the growth it delivers high ROIC at 38.0%. During the last three years it surged - it was 10.1% in FY2011. Average ROIC for the last three years was 34.4%.
Photon Control Inc's Net Income margin surged on 3.80 pp from 20.2% to 24% in 2014. In the last 3 years the company's Net Income margin dropped on 16.5 pp from 40.5% in 2011 to 24% in 2014.
Photon Control Inc operates at ROE of 26.8%. Average ROE for the last three years was 26.6%.
Capital expenditures (CAPEX)
Photon Control Inc's CAPEX/Revenue was 0.425% in FY2014. Photon Control Inc's CAPEX/Revenue dropped on 0.303 pp from 0.728% in 2011 to 0.425% in 2014. It's average level of CAPEX/Revenue for the last three years was 0.283%.
Leverage (Debt)
The company has negative net debt at -2.3x Net Debt/EBITDA - at the same time with high growth. In the last 3 years Photon Control Inc's leverage surged on 1.23x from -1.05x in 2011 to -2.28x in 2014.
Valuation vs. comparable companies
At the end of trading day today Photon Control Inc traded at 9.1x EV/EBITDA which is 44.1% lower than 16.3x Industrial peer group avearge calculated on the basis of 168 companies. The market closed today at 14.0x P/E for Photon Control Inc which is 40.4% lower than 23.5x Industrial peer group avearge calculated on the basis of 47 companies.
Peers in Industrial
Below we provide Photon Control Inc benchmarking against other companies in Industrial industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Electrovaya Inc ($EFL) | | 104.3% | -4.0% | -71.2% | 160.5% |
| Enterprise Group Inc ($E) | | 14.5% | 3.5% | 88.3% | 128.5% |
| Carmanah Technologies Corp ($CMH) | | 5.8% | -26.4% | -2.0% | 68.8% |
| Exco Technologies Ltd ($XTC) | | 22.4% | 19.7% | 0.9% | 50.5% |
| Lumenpulse Inc ($LMP) | | | 56.7% | 33.9% | 47.0% |
| |
|---|
| Median (79 companies) | | 13.6% | 10.3% | 4.5% | 9.1% |
|---|
| Photon Control Inc ($PHO) | | -13.5% | -8.6% | 64.3% | 21.9% |
Top companies by Gross margin, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| WSP Global Inc ($WSP) | 39.8% | 81.1% | 81.1% | 83.2% | 81.0% |
| Pure Technologies Ltd ($PUR) | 64.5% | 75.7% | 77.9% | 78.0% | 77.5% |
| Alarmforce Industries Inc ($AF) | 69.7% | 76.4% | 75.0% | 76.5% | 72.2% |
| Epicore BioNetworks Inc ($EBN) | 61.3% | 59.0% | 60.8% | 63.2% | 64.1% |
| Evertz Technologies Ltd ($ET) | 58.3% | 57.7% | 56.6% | 57.5% | 57.2% |
| |
|---|
| Median (75 companies) | 22.9% | 22.6% | 23.6% | 23.4% | 23.2% |
|---|
| Photon Control Inc ($PHO) | 42.7% | 38.6% | 37.1% | 42.3% | 48.2% |
Top companies by EBITDA margin, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Canadian National Railway Co ($CNR) | 46.5% | 46.3% | 46.5% | 45.9% | 46.8% |
| Canadian Pacific Railway Ltd ($CP) | 32.2% | 28.1% | 26.1% | 32.4% | 43.7% |
| Vitreous Glass Inc ($VCI) | 31.8% | 29.0% | 31.4% | 32.2% | 37.8% |
| Progressive Waste Solutions Ltd ($BIN) | 31.8% | 32.2% | 30.7% | 33.1% | 34.0% |
| Badger Daylighting Ltd ($BAD) | 24.8% | 27.2% | 25.7% | 25.9% | 27.9% |
| |
|---|
| Median (72 companies) | 7.9% | 8.6% | 10.2% | 8.8% | 9.0% |
|---|
| Photon Control Inc ($PHO) | 23.5% | 8.1% | 17.6% | 24.8% | 29.3% |
Top companies by CAPEX/Revenue, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Cargojet Inc ($CJT.A) | 3.1% | 6.8% | 7.0% | 6.3% | 54.1% |
| Newalta Corp ($NAL) | 11.9% | 17.2% | 21.7% | 34.5% | 35.1% |
| Enterprise Group Inc ($E) | 5.7% | 3.6% | 17.4% | 27.2% | 32.7% |
| ENTREC Corp ($ENT) | 0.0% | | 35.0% | 26.7% | 29.5% |
| Horizon North Logistics Inc ($HNL) | 17.4% | 25.1% | 26.5% | 16.3% | 24.1% |
| |
|---|
| Median (79 companies) | 2.2% | 2.4% | 3.2% | 3.8% | 3.7% |
|---|
| Photon Control Inc ($PHO) | 0.8% | 0.7% | 0.2% | 0.2% | 0.4% |
Top companies by ROIC, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Vitreous Glass Inc ($VCI) | 28.8% | 26.1% | 30.5% | 32.3% | 48.3% |
| SNC-Lavalin Group Inc ($SNC) | 17.5% | 14.6% | 10.7% | 4.0% | 35.2% |
| Alarmforce Industries Inc ($AF) | 26.8% | 18.3% | 5.3% | 24.0% | 33.9% |
| Epicore BioNetworks Inc ($EBN) | 20.4% | 24.8% | 28.1% | 16.1% | 32.5% |
| STT Enviro Corp ($STT) | -65.1% | 88.7% | 55.1% | 44.3% | 30.4% |
| |
|---|
| Median (80 companies) | 9.8% | 9.6% | 10.7% | 9.0% | 10.6% |
|---|
| Photon Control Inc ($PHO) | 92.6% | 10.1% | 21.0% | 44.4% | 38.0% |
Top companies by Net Debt / EBITDA
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Sigma Industries Inc ($SSG) | | | 4.4x | 11.3x | 225.9x |
| H2O Innovation Inc ($HEO) | | | | 4.2x | 73.2x |
| Cargojet Inc ($CJT.A) | 1.5x | 1.8x | 1.5x | 1.5x | 31.5x |
| IBI Group Inc ($IBG) | 3.6x | 4.2x | 6.5x | | 8.3x |
| Conifex Timber Inc ($CFF) | | | | 2.7x | 6.1x |
| |
|---|
| Median (63 companies) | 0.9x | 1.1x | 1.5x | 1.5x | 1.3x |
|---|
| Photon Control Inc ($PHO) | -0.3x | -1.0x | -1.9x | -1.4x | -2.3x |
