Mitel Networks Corp. – Value Analysis (TORONTO:MNW) : December 18, 2017

Capitalcube gives Mitel Networks Corp. a score of 66.

Our analysis is based on comparing Mitel Networks Corp. with the following peers – Stingray Digital Group, Inc., Real Matters, Inc., Rediff.com India Ltd. Sponsored ADR and Points International Ltd. (RAY.B-CA, REAL-CA, REDFY-US and PTS-CA).

Investment Outlook

Mitel Networks Corp. has a fundamental score of 66 and has a relative valuation of OVERVALUED.

Fundamental Score

Access our research and ratings on Mitel Networks Corp.

Company Overview

  • From a peer analysis perspective, relative outperformance last month is up from a median performance last year.
  • It’s current Price/Book of 3.20 is about median in its peer group.
  • The market expects MNW-CA to grow faster than its peers and for the company to improve its current ROE.
  • MNW-CA‘s relative asset efficiency and net profit margins are both around the median level.
  • 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.
  • MNW-CA‘s return on assets currently and over the past five years is around the peer median and suggest that it does not have any particular operational advantages versus peers.
  • The company’s relatively high gross margin suggests some differentiation with pricing advantages versus peers.
  • Compared with the peers chosen, MNW-CA has had faster revenue growth in prior years and a current P/E ratio that suggests faster growth in the future suggesting superior growth expectations.
  • The company is likely overinvesting in a business with only median returns.
  • MNW-CA might have enough interest coverage to take-on additional debt prudently.

Access our research and ratings on Mitel Networks Corp.

Leverage & Liquidity

MNW-CA might have enough interest coverage to take-on additional debt.

  • While MNW-CA‘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 4.38%), it also enjoys a relatively high interest coverage level of 4.46x 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.
  • Of the 4 chosen peers for the company, only 2 of the stocks have an outstanding debt balance. Companies with no debt include REDFY-US and PTS-CA.

MNW-CA has maintained its Some Capacity profile from the recent year-end.

  • MNW-CA‘s interest coverage is its highest relative to the last five years and compares to a low of 1x in 2013.
  • While its interest coverage increased to 4.46x from 3.61x (in 2016), its peer median decreased during this period to 4.46x from 6.01x.
  • Interest coverage rose 2.40 points relative to peers.
  • MNW-CA‘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 (4.38%).

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 (%)
Stingray Digital Group, Inc. 8.76 1.04 2.12 36.87
Real Matters, Inc. N/A N/A -25.11 37.5
Rediff.com India Ltd. Sponsored ADR 0 1.72 No interest exp 999
Points International Ltd. 0 1.25 No interest exp 999
Mitel Networks Corporation 44.54 1 4.46 8.02
Peer Median 4.38 1.14 4.46 37.5
Best In Class 8.76 1.72 No interest exp 999

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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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