TOP IDEAS: Integration of acquisition and expanded product
portfolio are playing out for Novra Technologies Inc. (TSXV: NVI) as revenues
and profits show robust growth. The stock price is undervalued.
We enjoy profiling public companies with a management team
that says what they will do and do what they say. Novra Technologies is such a
Based in Winnipeg, Manitoba, Novra Technologies Inc. (TSXV:
NVI – C$0.155) is the parent company of the Novra Group of Companies, which
includes Kanata, Ontario-based International Datacasting Corporation (IDC) and
Georgia-USA based Wegener Corporation.
The Novra Group is an international technology provider of
products, systems and services for the distribution of broadband multimedia
content via satellite and hybrid networks. Novra applications focus includes
broadcast video and radio, digital cinema, digital signage and highly reliable
data communications. It designs, manufactures, installs and supports
high-quality solutions for secure and reliable delivery of digital content.
Customers include major broadcasters and service providers, as well as
government (military and civilian applications) and enterprise networks.
The Investorfile blog launched coverage on Novra
Technologies as one of our Top Ideas at the beginning of this year (See:
Technologies is getting bigger and the stock is a value buy). What
caught our attention at the time was that the Company was beginning to scale,
and the most recent acquisition of a controlling interest in Wegener Corporation would make Novra a bigger company with
a stronger product portfolio and greater operating leverage, which could lead
to revenue and profit growth.
While the benefits of the Wegener acquisition had promise,
Management cautioned investors in public filings that the Company’s financials
may be weak during the integration process but the results should begin to show
substantial improvements beginning in the second half of 2018. That said,
Management was true to its word.
At the end of November, Novra Technologies reported its Q3
financial results and, yes, the numbers are starting to look good. For
the three-month period ended September 30, 2018, revenues jumped 74% to C$3.55
million. The strong revenue gains drove profitable results. The adjusted EBITDA
for the quarter was C$862,000 with a net income C$467,000 or C$0.01 earnings
per share. Management comments indicate that Q4 results to date are also
tracking positively as the Wegener acquisition should contribute to the
consolidated bottom line in the current quarter and beyond.
Back in January of this year, when we first profiled Novra
Technologies, we saw tremendous value in the Company’s shares based on our
forward-looking forecast, which took into consideration the potential impact of
the Wegener acquisition. Given the actual results, Nova Technologies has
exceeded our expectations to date, thus the current share price is the same as
it was some 11 months ago.
From our analysis we continue to see tremendous value
in the Company’s share price. Therefore, we encourage small cap investors to
take advantage of the current stock valuation levels of Novra Technologies. We
maintain our recommendation to accumulate the shares up to a price of C$0.30.
Based on information filed in the Company’s Q3 2018
Management Discussion & Analysis (MD&A), investors should feel some validation
that the outlook is very positive in the near and long-term. This makes Novra
Technologies’ stock a stronger buy than ever in our opinion.
The Company has about 35.3 million shares outstanding.
Novra Technologies websites: www.novra.com and www.novragroup.com.
ownership disclosure: Yes: TSXV: NVI
article is for informational purposes only. This article is based on the
author's independent analysis and judgment and does not guarantee the
information's accuracy or completeness. The information contained in this
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is not engaged in an investor relations agreement with Novra Technologies Inc. nor
has it received any compensation from Novra Technologies Inc. for the
preparation or distribution of this article.
author of this article has acquired and may trade shares of Novra Technologies
Inc. through open market transactions and for investment purposes only.