Franklin Wireless Corp Net Income surged on 535% and Revenue surged on 106%
09/17/2020 • About Franklin Wireless Corp (
$FKWL) • By InTwits
Franklin Wireless Corp reported FY2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Franklin Wireless Corp is a growth stock: FY2020 revenue growth was 106%, 5 year revenue CAGR was 10.1% at FY2020 ROIC 37.5%
- EBITDA Margin is quite volatile: 10.8% in FY2020, -4.4% in FY2019, -6.9% in FY2018, 3.1% in FY2017, 5.2% in FY2016
- Franklin Wireless Corp has low CAPEX intensity: 5 year average CAPEX/Revenue was 0.2%.
- The company has highly profitable business model: ROIC is 37.5%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue surged on 106%. During the last 5 years Revenue growth bottomed in FY2018 at -38.1% and was accelerating since that time. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased on 4.9 pp from -6.2% to -1.2% in FY2020. During FY2016-FY2020 EBITDA Margin bottomed in FY2018 at -6.9% and was growing since that time.
Gross Margin increased on 3.6 pp from 15.7% to 19.3% in FY2020. SG&A as a % of Revenue decreased on 8.5 pp from 13.4% to 4.9% in FY2020. During the last 5 years SG&A as a % of Revenue topped in FY2018 at 15.0% and was declining since that time.
Net Income margin jumped on 10.9 pp from -3.5% to 7.4% in FY2020. During the last 5 years Net Income margin bottomed in FY2018 at -7.0% and was growing since that time.
Investments (CAPEX, working capital and M&A)
In FY2020 Franklin Wireless Corp had CAPEX/Revenue of 0.24%. CAPEX/Revenue showed almost no change from FY2017 to FY2020. Average CAPEX/Revenue for the last three years was 0.20%.
Return on investment
The company operates at high and attractive ROIC (37.5%) and ROE (31.6%). ROIC surged on 50.6 pp from -13.0% to 37.5% in FY2020. ROE surged on 39.9 pp from -8.3% to 31.6% in FY2020. During FY2016-FY2020 ROIC bottomed in FY2018 at -14.9% and was growing since that time. During the last 5 years ROE bottomed in FY2018 at -12.2% and was growing since that time.
Leverage (Debt)
Company's Net Debt / EBITDA is -3.3x and Debt / EBITDA is 0.2x. Debt surged while cash jumped on 337%.
Franklin Wireless Corp has no short term refinancing risk: cash is higher than short term debt (7,031.5%).
Valuation and dividends
The company's trades at EV/EBITDA 15.6x and P/E 27.5x.
Financial and operational results
FY ended 06/30/2020
Franklin Wireless Corp ($FKWL) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 59.805 | 48.566 | 30.066 | 36.469 | 75.072 | 105.9% |
| Gross Profit | 9.925 | 9.218 | 5.192 | 5.739 | 14.524 | 153.1% |
| SG&A | 4.816 | 4.899 | 4.512 | 4.891 | 3.700 | -24.4% |
| EBITDA | 3.087 | 1.489 | -2.084 | -1.592 | 8.089 | |
| Net Income | 1.611 | 0.874 | -2.092 | -1.276 | 5.551 | |
Balance Sheet
|
|---|
| Cash | 13.157 | 14.285 | 11.976 | 6.448 | 28.162 | 336.8% |
| Short Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 0.401 | |
| Long Term Debt | 0.000 | 0.000 | 0.000 | 0.000 | 1.272 | |
Cash flow
|
|---|
| Capex | 0.173 | 0.045 | 0.024 | 0.101 | 0.182 | 80.4% |
Ratios
|
|---|
| Revenue growth | 29.0% | -18.8% | -38.1% | 21.3% | 105.9% | |
| EBITDA growth | 56.5% | -51.8% | -240.0% | -23.6% | -608.0% | |
|
|---|
| Gross Margin | 16.6% | 19.0% | 17.3% | 15.7% | 19.3% | 3.6% |
| EBITDA Margin | 5.2% | 3.1% | -6.9% | -4.4% | 10.8% | 15.1% |
| SG&A, % of revenue | 8.1% | 10.1% | 15.0% | 13.4% | 4.9% | -8.5% |
| Net Income Margin | 2.7% | 1.8% | -7.0% | -3.5% | 7.4% | 10.9% |
| CAPEX, % of revenue | 0.3% | 0.1% | 0.1% | 0.3% | 0.2% | -0.0% |
|
|---|
| ROIC | 12.2% | 4.7% | -14.9% | -13.0% | 37.5% | 50.6% |
| ROE | 9.8% | 5.0% | -12.2% | -8.3% | 31.6% | 39.9% |
| Net Debt/EBITDA | -4.3x | -9.6x | | | -3.3x |
Franklin Wireless Corp ($FKWL) key quoterly financial indicators
| mln. $ | FY20Q1 | FY20Q2 | FY20Q3 | FY20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 9 | 13 | 16 | 46 | | - | - | - | - |
| EBITDA | 0 | 1 | 1 | 6 | | - | - | - | - |
| Net Income | 0 | 1 | 1 | 4 | | - | - | - | - |
Balance Sheet
|
|---|
| Cash | 5 | 9 | 8 | 28 | | - | - | - | - |
| Short Term Debt | 0 | 0 | 0 | 0 | | - | - | - | - |
| Long Term Debt | 1 | 1 | 1 | 1 | | - | - | - | - |
Ratios
|
|---|
| Gross Margin | 22.8% | 19.5% | 19.5% | 19.2% | | - | - | - | - |
| EBITDA Margin | 5.5% | 7.9% | 9.4% | 12.1% | | - | - | - | - |
| Net Income Margin | 2.9% | 4.4% | 6.4% | 8.6% | | - | - | - | - |
Peers in Communications Equipment
Below you can find Franklin Wireless Corp benchmarking vs. other companies in Communications Equipment industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Resonant Inc. ($RESN) | - | 116.2% | -19.8% | 40.3% | 329.9% |
| Ribbon Communications Inc. ($RBBN) | - | 30.6% | 75.2% | -2.6% | 49.8% |
| Inseego Corp. ($INSG) | - | -10.0% | -7.7% | 8.4% | 43.0% |
| Casa Systems, Inc. ($CASA) | - | 11.2% | -15.5% | -5.0% | 39.3% |
| Lantronix, Inc. ($LTRX) | - | 10.2% | 1.9% | 2.9% | 27.7% |
| |
|---|
| Median (35 companies) | 7.5% | 5.6% | 3.5% | 3.7% | 2.1% |
|---|
| Franklin Wireless Corp ($FKWL) | - | -18.8% | -38.1% | 21.3% | 105.9% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| F5 Networks, Inc. ($FFIV) | 83.1% | 83.1% | 83.3% | 84.1% | 82.6% |
| Radware Ltd. ($RDWR) | 81.8% | 81.3% | 82.2% | 82.1% | 82.0% |
| Radcom Ltd. ($RDCM) | 69.6% | 71.8% | 74.0% | 70.0% | 71.4% |
| AudioCodes Ltd. ($AUDC) | 60.7% | 62.4% | 62.8% | 47.4% | 67.9% |
| Arista Networks, Inc. ($ANET) | 64.0% | 64.5% | 63.8% | 64.1% | 63.9% |
| |
|---|
| Median (33 companies) | 43.9% | 41.7% | 41.2% | 44.3% | 46.8% |
|---|
| Franklin Wireless Corp ($FKWL) | 16.6% | 19.0% | 17.3% | 15.7% | 19.3% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| InterDigital, Inc. ($IDCC) | 73.6% | 67.3% | 41.9% | 37.5% | 39.5% |
| EchoStar Corporation ($SATS) | 40.3% | 38.1% | 37.4% | 36.4% | 35.0% |
| Arista Networks, Inc. ($ANET) | 23.3% | 29.8% | 14.0% | 35.7% | 33.1% |
| Motorola Solutions, Inc. ($MSI) | 22.2% | 25.5% | 22.0% | 26.7% | 25.9% |
| F5 Networks, Inc. ($FFIV) | 30.3% | 29.9% | 30.1% | 26.2% | 22.9% |
| |
|---|
| Median (32 companies) | 5.9% | 6.5% | 5.4% | 5.0% | 8.8% |
|---|
| Franklin Wireless Corp ($FKWL) | 5.2% | 3.1% | -6.9% | -4.4% | 10.8% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Resonant Inc. ($RESN) | 132.5% | 124.8% | 245.2% | 109.7% | 22.3% |
| EchoStar Corporation ($SATS) | 39.9% | 30.9% | 26.5% | 22.2% | 21.7% |
| KVH Industries, Inc. ($KVHI) | 3.2% | 8.0% | 9.3% | 7.9% | 8.9% |
| Harmonic Inc. ($HLIT) | 3.7% | 3.2% | 1.7% | 2.6% | 8.5% |
| Applied Optoelectronics, Inc. ($AAOI) | 19.0% | 17.5% | 26.9% | 15.1% | 6.7% |
| |
|---|
| Median (32 companies) | 2.0% | 1.9% | 1.7% | 2.5% | 2.2% |
|---|
| Franklin Wireless Corp ($FKWL) | 0.3% | 0.1% | 0.1% | 0.3% | 0.2% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Motorola Solutions, Inc. ($MSI) | 26.4% | 39.5% | 35.3% | 34.0% | 26.4% |
| Arista Networks, Inc. ($ANET) | 25.7% | 33.9% | 14.5% | 33.3% | 23.5% |
| AudioCodes Ltd. ($AUDC) | 6.1% | 8.6% | 16.1% | -7.7% | 20.8% |
| F5 Networks, Inc. ($FFIV) | 43.1% | 46.9% | 47.9% | 34.1% | 16.5% |
| Ciena Corporation ($CIEN) | 7.9% | 8.3% | 7.6% | 11.9% | 15.5% |
| |
|---|
| Median (35 companies) | 2.2% | 2.1% | 0.7% | 1.2% | 1.9% |
|---|
| Franklin Wireless Corp ($FKWL) | 12.2% | 4.7% | -14.9% | -13.0% | 37.5% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Inseego Corp. ($INSG) | - | - | 3.9x | 82.5x | 26.9x |
| CommScope Holding Company, Inc. ($COMM) | 4.3x | 4.6x | 4.4x | 27.0x | 10.5x |
| Harmonic Inc. ($HLIT) | - | - | 3.4x | 1.9x | 6.5x |
| Ribbon Communications Inc. ($RBBN) | -17.2x | - | - | - | 3.5x |
| Casa Systems, Inc. ($CASA) | -0.2x | 0.3x | 0.2x | 32.1x | 3.2x |
| |
|---|
| Median (24 companies) | -0.8x | -0.6x | -0.1x | -0.3x | -0.3x |
|---|
| Franklin Wireless Corp ($FKWL) | -4.3x | -9.6x | - | - | -3.3x |
