RELM Wireless Corp. (AMEX: RWC)
RELM Wireless Corp. (RWC) designs, manufactures and markets wireless communications products. The Company designs and manufactures two-way land mobile radios, repeaters, base stations, and related components and subsystems. The Company offers products under three brand names: BK Radio, RELM/BK and RWC. BK Radio-branded products serve the government and public safety market, while RELM-branded products serve the business and industrial market. RELM/BK-branded products serve both of these markets. BK Radio-branded products consist of high-specification land-mobile radio equipment for professional radio users primarily in government and public safety applications. Its P-25 digital products are marketed under the BK Radio brand, which includes KNG product line that was launched during the year ended December 31, 2008. The Company’s products provide two-way communications for commercial and industrial concerns, such as hotels, construction firms, schools and transportation services.
The Company was founded in 1957 and is based in West Melbourne, Florida.
|
Share Statistics (8-Dec-09) |
|
FY 2007 |
FY 2008 |
% Chg |
Q3 2008 |
Q3 2009 |
% Chg |
|
| Symbol |
RWC |
Revenue, $Mn |
27.0M |
19.2M |
28.9% |
n/a |
8.3M |
n/a |
| Current price |
$4.47 |
Gross marg. |
51.2% |
47.3% |
7.6% |
n/a |
50.6% |
n/a |
| 52wk Range: |
$0.41-5.75 |
Oper. margin |
8.4% |
-15.9% |
289.3% |
n/a |
18.1% |
n/a |
| Avg Vol (3m): |
86,018 |
Net margin |
6.7% |
-8.3% |
223.9% |
n/a |
11.2% |
n/a |
| Market Cap. |
72.1M |
|
|
|
|
|
|
|
| Dil. Shares Outst. |
13.4M |
EPS, $ |
n/a |
-0.12 |
n/a |
0.03 |
0.07 |
133.3% |
Source: Reuters.com, SEC Filings.
Financial Summary
For the quarter ended September 30, 2009, sales increased $2.5 million (43.2%) to approximately $8.3 million, compared with $5.8 million for the same quarter last year. Pretax income for the quarter increased 265.0%, or $1.1 million, to $1.5 million compared with $0.4 million for the same quarter last year. Net income for the third quarter 2009 approximated $0.9 million, or $0.07 per diluted share, compared with $0.3 million, or $0.02 per share, for the prior year’s third quarter. Gross profit margin for the third quarter 2009 was improved to 51.1% of sales, versus 50.7% of sales for the same quarter last year. Selling, general and administrative expenses were $2.7 million (32.8% of sales) in the third quarter 2009, compared with $2.6 million (44.1% of sales) in the third quarter 2008. The Company had approximately $16.2 million in working capital as of September 30, 2009. Cash and trade receivables increased almost 70% ($5.1 million) to-date in 2009 to $12.3 million, compared with $7.2 million at the start of the year. During the nine months ended September 30, 2009, the Company reduced net inventories by approximately $3.6 million (37.1%), and repaid in its entirety the $1.5 million balance that was outstanding at the start of the year on its revolving credit facility.
|
Financial Strength (8-Dec-2009) |
Company | Industry | Sector | S&P 500 |
| Quick Ratio (MRQ) | 3.95 | 2.42 | 1.74 | 0.85 |
| Current Ratio (MRQ) | 5.76 | 2.83 | 2.05 | 1.00 |
| Long-Term Debt to Equity (MRQ) | 0.00 | 23.21 | 18.45 | 130.15 |
| Total Debt to Equity (MRQ) | 0.00 | 38.12 | 29.49 | 200.30 |
Source: Reuters.com, SEC Filings.
Analyst Consensus
|
Buy |
Outperform |
Hold |
Underperform |
Sell |
No Opinion |
This is the consensus forecast among 1 polled investment analysts. Against the RELM Wireless Corp. company.
|
Analyst Detail |
Buy |
Outperform |
Hold |
Underperform |
Sell |
No Opinion |
|
Latest |
0 |
0 |
1 |
0 |
0 |
0 |
|
4 weeks ago |
0 |
0 |
1 |
0 |
0 |
0 |
|
2 months ago |
0 |
0 |
1 |
0 |
0 |
0 |
|
3 months ago |
0 |
0 |
1 |
0 |
0 |
0 |
|
Last year |
0 |
0 |
1 |
0 |
0 |
0 |
Source: www.ft.com
|
|
# of Estimates |
Mean |
High |
Low |
1 Year Ago |
|
SALES (in millions) |
|||||
|
Quarter Ending Dec-09 |
1 |
6.00 |
6.00 |
6.00 |
7.00 |
|
Quarter Ending Mar-10 |
1 |
5.50 |
5.50 |
5.50 |
– |
|
Year Ending Dec-09 |
1 |
28.14 |
28.14 |
28.14 |
29.50 |
|
Year Ending Dec-10 |
1 |
32.00 |
32.00 |
32.00 |
– |
|
EARNINGS (per share) |
|||||
|
Quarter Ending Dec-09 |
1 |
0.03 |
0.03 |
0.03 |
0.02 |
|
Quarter Ending Mar-10 |
1 |
0.01 |
0.01 |
0.01 |
– |
|
Year Ending Dec-09 |
1 |
0.18 |
0.18 |
0.18 |
0.16 |
|
Year Ending Dec-10 |
1 |
0.25 |
0.25 |
0.25 |
– |
Source: http://www.reuters.com/finance/stocks/financialHighlights?symbol=RWC
Investment Highlights
RWC announced in early November that it has been awarded orders totaling approximately $700,000 from the U.S. Department of Defense (DoD). These orders are for the Company’s new digital P25 100-watt repeaters, KNG portable radios and accessories. It is anticipated that the orders will be fulfilled during the fourth quarter of 2009. APCO Project 25 (P25), which requires interoperability among compliant equipment regardless of the manufacturer, was established by the Association of Public-Safety Communications Officials and is approved by the U.S. Department of Homeland Security. The shift toward interoperability gained momentum as a result of significant communications failures during events such as the 9/11 attacks and Hurricane Katrina. RWC was one of the first manufacturers to develop P25-compliant technology.
In mid-September RWC announced the availability of two new features for its KNG line of P25 two-way radios: Wireless Tactical OTAR and Multicast VoteScan Plus (MVP). Both features are industry-firsts and unique to RWC’s KNG products. Wireless Tactical OTAR enables radio encryption keys to be changed without the use of a key-loader device when the radios are deployed. This capability significantly streamlines the user’s encryption-key process by adding the capability to bypass the re-key infrastructure; eliminating the need to deploy expensive key-loader equipment with the radios, and thereby saving customers’ time and significantly reducing their equipment costs. Multicast VoteScan Plus (MVP) enables radios to scan predetermined channels to find the strongest available radio signal in a wide-area multicast network. RWC’s MVP technology takes this scan ability to the next level by simultaneously scanning additional channels outside the multicast network. This combination, unique to RWC, allows RWC’s KNG products to not only scan channels but also find the strongest signal, which means improved communications for the radio user.
Source: http://www.relmwireless.com/default.asp
Technical Analysis
Source: http://stockcharts.com
RWC’s recent volatility has been greater than normal. This is evidenced by the increased distance between the upper and lower Bollinger Bands. These bands measure volatility using standard deviation and a large width is due to high volatility. Additionally, RWC is trading above its upper Bollinger Band. Relative to recent price action, the stock is currently overextended and due for either a pause or retracement.
The MACD for RWC currently indicates a strong bullish signal for two reasons. First, the MACD is above the signal line, a 9-day moving average. Second, the MACD is above 0, which implies that the underlying moving averages are trending higher.
Comparative Analysis
|
Company Name |
Ticker |
Price per |
Mrkt. Cap. |
P/E |
P/S |
||
|
Dec-8-2009 |
symbol |
Share, $ |
$ Mn |
2009 |
2010 |
2009 |
2010 |
|
|
|
|
|
|
|
|
|
| Motorola Inv. |
MOT |
8.48 |
19.50B |
n/a |
n/a |
0.80 |
n/a |
| Harris Corp. |
HRS |
45.33 |
5.97B |
11.92 |
n/a |
1.21 |
n/a |
| Nokia Corp. |
NOK |
12.69 |
47.05B |
n/a |
n/a |
n/a |
n/a |
| Communication Median |
|
22.16 |
24.17B |
n/a |
n/a |
1.00 |
n/a |
| RELM Wireless Corp. |
RWC |
4.47 |
72.1M |
35.24 |
n/a |
1.27 |
n/a |
Source: Thomson Financial
Insider Trading Activity
|
NET SHARES PURCHASE ACTIVITY Inside Purchases – Last 6 Months |
||
|
Shares |
Transaction |
|
| Purchases |
n/a |
0 |
| Sales |
n/a |
0 |
| Net Shares Purchased (Sold) |
n/a |
0 |
| Total Insider Shares Held |
1.94M |
n/a |
| % Net Shares Purchased (Sold) |
0.0% |
n/a |
|
Net Institutional Purchases — Prior Qtr to Latest Qtr |
|
|
Shares |
|
| Net Shares Purchased (Sold) |
(811,691) |
| % Change in Institutional Shares Held |
(54.8%) |
Source: Yahoo Finance
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