TOP IDEAS: Stock price should head higher if DDS Wireless results are stronger.
In about 2 weeks DDS Wireless International (TSX: DD) is expected to release its 2011 annual results.
Therefore let's look back in time to give us inspiration for the future of DDS Wireless and its stock price.
The date was March 3rd, 2011 and DDS Wireless reported for the year 2010 it had generated revenues of $41.3 million, EBITDAS (earnings before interest, taxes, depreciation, amortization and stock compensation expenses) of $5.2 million (13% of sales) and earnings of $0.12 per share. The balance sheet was debt-free with excess cash.
That day, the Company's stock traded at $2.25 per share.
Fast forward one year to February 21, 2012, and DDS Wireless stock trades at $2.25 per share.
So I ask what has changed between then and now for DDS Wireless?
Here is what we do know:
For the first three quarters of 2011, the Company reported revenues of $33.2 million, EBITDAS of $5 million (15% of sales) and earnings of $0.11 per share. Q3's contribution was revenues of $12.5 million, EBITDAS of $3 million (24% of sales) and $0.10 in earnings per share. The balance sheet remained debt-free but with much more cash than the prior year.
Here is the kicker. The Company's guidance is that revenues will be greater than $45 million for 2011 ($12 million for Q4). Therefore the indication is that Q4 was another strong quarter for DDS Wireless.
Compiling this information, we expect DDS Wireless 2011 results will report revenue growth, significant increase in EBITDAS, solid improvement in earnings per share and guidance that 2012 revenues could be higher.
If the trends prove to be true, will DDS Wireless share price remain at $2.25? We don't think so!
DDS Wireless share price trades up 32% since Investorfile's first blog post: Buy for value, ride the growth.
Author's Ownership Position TSX: DD - Long
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