Globalstar, Inc. – Value Analysis (NYSE AMERICAN:GSAT) : October 6, 2017

Capitalcube gives Globalstar, Inc. a score of 16.

Our analysis is based on comparing Globalstar, Inc. with the following peers – ORBCOMM Inc., Intelsat S.A., Inmarsat plc Unsponsored ADR, Iridium Communications Inc., Global Eagle Entertainment, Inc., EchoStar Corporation Class A, Comtech Telecommunications Corp., DISH Network Corporation Class A, Pendrell Corporation and Loral Space & Communications Inc. (ORBC-US, I-US, IMASY-US, IRDM-US, ENT-US, SATS-US, CMTL-US, DISH-US, PCO-US and LORL-US).

Investment Outlook

Globalstar, Inc. has a fundamental score of 16 and has a relative valuation of OVERVALUED.

Fundamental Score

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Company Overview

  • With respect to peers, relative outperformance over the last year is in contrast to the more recent underperformance.
  • It currently trades at a Price/Book ratio of (18.61).
  • GSAT-US‘s EBITDA-based price implies better than peer median growth.The market seems to expect a turnaround in the company’s current EBITDA-based return on equity.
  • GSAT-US‘s relatively low net margins and poor asset turns suggest a problematic operating strategy.
  • Changes in annual revenues (relative to peers) are better than the change in its earnings (relative to peers), implying the company is focused more on revenues.
  • GSAT-US‘s return on assets currently and over the past five years has trailed the peer median and suggests the company might be operationally challenged relative to its peers.
  • The company’s relatively low gross and pre-tax margins suggest a non-differentiated product portfolio and not much control on operating costs relative to peers.
  • While GSAT-US‘s revenues growth has been around the peer median in recent years, the market seems to see faster growth ahead and gives its shares a higher than peer median Price/EBITDA ratio.
  • The company’s relatively low level of capital investment and below peer median returns on capital suggest that the company is in maintenance mode.
  • GSAT-US‘s operating performance may not allow it to raise additional debt.

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Leverage & Liquidity

GSAT-US would seem to have a hard time raising additional debt.

  • With debt at a relatively low 18.77% of its enterprise value compared to an overall benchmark of 25% (Note: The peer median is currently 36.32%), and relatively tight interest coverage level of -1.26x, GSAT-US would have a hard time raising much additional debt. Thus, the company is classified as having Limited Flexibility when it comes to raising more debt.
  • Of the 10 chosen peers for the company, only 7 of the stocks have an outstanding debt balance. Companies with no debt include PCO-US and LORL-US.

GSAT-US has moved to a Constrained from a relatively low liquidity profile at the recent year-end.

  • GSAT-US‘s interest coverage is upward trending and is now similar to its five-year average interest coverage of -1.34x.
  • Compared to 2016, interest coverage has remained relatively stable for both the company (-1.26x) and the peer median (1.57x).
  • GSAT-US‘s debt-EV continues to trend downward and is below (but within one standard deviation of) its five-year average debt-EV of 38.85%.
  • The decrease in its debt-EV to 18.77% from 24.90% (in 2016) was also accompanied by a decrease in its peer median during this period to 36.32% from 38.03%.
  • Relative to peers, debt-EV fell 4.41 percentage points. Unlike the peer median, it is also below the 25% leverage benchmark.

Access the detailed analysis for Globalstar, Inc.

Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
ORBCOMM Inc. 24.77 2.76 -0.24 16.53
Intelsat S.A. 101 1.11 0.87 4.72
Inmarsat plc Unsponsored ADR 42.22 1.11 3.04 26.54
Iridium Communications Inc. 70.03 2.22 337.04 15.15
Global Eagle Entertainment, Inc. N/A N/A -3.06 N/A
EchoStar Corporation Class A 58.85 9.11 1.57 18.43
Comtech Telecommunications Corp. 33.85 1.67 2.15 28.04
DISH Network Corporation Class A 38.79 0.63 21 18.23
Pendrell Corporation 0 16.39 No interest exp 999
Loral Space & Communications Inc. 0 5.72 -341.82 999
Globalstar, Inc. 18.77 0.17 -1.26 1.92
Peer Median 36.32 1.95 1.57 18.33
Best In Class 18.77 16.39 No interest exp 999

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Company Profile

Globalstar, Inc. provides mobile satellite services, voice and data communications services through satellite worldwide. It offers communications services via satellite which includes: two-way voice communication and data transmissions using mobile or fixed devices; and one-way data transmissions using a mobile or fixed device that transmits its location and other information to a central monitoring station. The company provides engineering services, such as hardware and software designs to develop specific applications; and installation of gateways and antennas. It serves to government; public safety and disaster relief; recreation and personal; telecommunications; oil and gas; maritime and fishing; natural resources; construction; utilities; and transportation markets. Globalstar was founded in November 2003 and is headquartered in Covington, LA.


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