Mitel Networks Corp. – Value Analysis (NASDAQ:MITL) : December 18, 2017

Capitalcube gives Mitel Networks Corp. a score of 41.

Our analysis is based on comparing Mitel Networks Corp. with the following peers – Microsoft Corporation, Cisco Systems, Inc. and Inventergy Global Inc (MSFT-US, CSCO-US and INVT-US).

Investment Outlook

Mitel Networks Corp. has a fundamental score of 41 and has a relative valuation of UNDERVALUED.

Fundamental Score

Access our research and ratings on Mitel Networks Corp.

Company Overview

  • From a peer analysis angle, relative underperformance over the last year has improved more recently.
  • It’s current Price/Book of 3.08 is about median in its peer group.
  • The market expects MITL-US‘s earnings to grow at about the same rate as its chosen peers and also does not seem to expect much improvement in its below peer median returns.
  • MITL-US has relatively low net profit margins while its asset efficiency is relatively high.
  • Changes in annual earnings (relative to peers) are better than the change in its revenues (relative to peers), implying the company is focused more on earnings.
  • MITL-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 median gross margin and relatively low pre-tax margin suggest high operating costs versus peers.
  • While MITL-US‘s revenues in recent years have grown faster than the peer median, the market gives the stock a P/E ratio that is around peer median suggesting that the market has some questions about the company’s long-term strategy.
  • The company’s capital investment program and to-date returns suggest that the company is likely making big bets on the future.
  • MITL-US might have enough interest coverage to take-on additional debt prudently.

Access our research and ratings on Mitel Networks Corp.

Leverage & Liquidity

MITL-US might have enough interest coverage to take-on additional debt.

  • While MITL-US‘s debt to enterprise ratio of 44.54% is on the high side compared to an overall benchmark of 25% (Note: The peer median is currently 36.28%), it also enjoys a relatively high interest coverage level of 4.47x which may give the company enough financial strength to support additional debt. Thus, the company is classified as having Some Capacity to raise more debt.
  • All 3 peers for the company have an outstanding debt balance.

MITL-US has maintained its Some Capacity profile from the recent year-end.

  • MITL-US‘s interest coverage is its highest relative to the last five years and compares to a low of 1x in 2013.
  • Though its interest coverage increased to 4.47x from 3.61x (in 2016), its peer median remained relatively stable during this period at 7.58x.
  • Interest coverage rose 0.60 points relative to peers.
  • MITL-US‘s debt-EV is greater than (but within one standard deviation of) its five-year average debt-EV of 42.32%.
  • Compared to 2016, debt-EV has remained relatively stable for both the company (44.54%) and the peer median (36.28%).

Access the detailed analysis for Mitel Networks Corp.

Key Liquidity Items

Company Debt/Enterprise Value (%) Current Ratio Interest Coverage (x) Cash Flow To Total Debt (%)
Microsoft Corporation 18.21 3.12 10.68 45.91
Cisco Systems, Inc. 28.03 2.87 13.8 38.31
Inventergy Global Inc 53.17 0.1 -0.95 -641.67
Mitel Networks Corporation 44.54 1 4.47 7.41
Peer Median 36.28 1.94 7.58 22.86
Best In Class 18.21 3.12 13.8 45.91

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Company Profile

Mitel Networks Corp. engages in the provision of cloud and enterprise communications and collaboration solutions through software product development. It operates through Enterprise, and Cloud segments. The Enterprise segment offers a broad range of unified communications and collaboration solutions, which address and support the full spectrum of technology specifications from digital to internet protocol to mobile, and from platforms to applications to end-user devices. The Cloud segment offers a full range of private, public, hybrid, and mobile software as a service solutions for businesses of all sizes. The company was founded by Terence Hedley Matthews in 1972 and is headquartered in Ottawa, Canada.


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