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Miranda Technologies (MRTK.PK is a profitable company in the Information Technology sector and Communications Equipment industry. The company develops, manufactures and distributes high-performance hardware and software for television service providers, specialty channels, broadcasters and content creators.

Miranda Technologies develops and manufactures various signal processing and distribution products, such as the conversion from standard definition to high definition broadcasting. Its second-quarter profits beat estimates, and it is set for another big year with the London Olympics and US elections. Revenue has risen 35% to $43.2 million in the last quarter. Miranda Technologies was recently added to the S&P/TSX SmallCap Index. Strath Goodship, president and CEO, said, “Our inclusion should further increase the liquidity of Miranda’s shares and heighten our exposure to a broader range of investors.”

BMO has a strong buy recommendation on the stock. In the third quarter, excluding extraordinary items, MT reported earnings per share of $0.35 versus an internal projection of $0.23 and a consensus among analysts of $0.22.

For BMO analyst Brian Piccioni, the company performed well in all geographic territories (Canada, USA, U.K., etc.). There is strong growth in the shift from broadcasters to HD technologies. Piccioni estimates that 23 broadcasters have transformed their signals in the third quarter, versus 16 in Q2 and 9 in Q3 2010. He raised his projection of EPS for 201; it is now $1.01 compared to $0.92. In 2012, it jumps to $1.11. However, he adds that MT operating activities are very variable and difficult to predict. The target price is $10. The currel price is around $8.26.

According to Vuru, Miranda Technologies is an undervalued stock with high capital intensity.

Vuru Grade

Under-valued by

Cash ROIC

ROE

Business perform-
ance

Bala-
nce sheet

Compe-
titive advant-
age

Pricing power

Capital Intens-
ity

83.82

65.53%

16.78%

11.03%

6 years

Good

Strong

Strong

High

Fundamentals

Per Share Data

Industry Range

MT

Industry

Earnings (TTM)

-0.6

7.9

$1.08

$2.76

Book Value

-1.6

22.3

$6.51

$10.69

Valuation

Price/Earnings

1.0

77.9

7.8x

16.0x

Price/Sales (FYR)

0.0

96.4

1.0x

2.0x

Price/Book (MRQ)

0.0

75.2

1.3x

2.8x

Price/Cash Flow (TTM)

0.3

61.0

12.4x

11.1x

Profitability (TTM)

Gross Margin

-984.4

49.1

10.04%

9.26%

Profit Margin

-984.4

44.7

8.51%

5.57%

Mgmt Effectiveness (TTM)

Return on Assets

-638.7

84.2

6.27%

10.22%

Return on Equity

-656.4

118.3

8.81%

18.64%

Return on Investment

-3.6K

117.0

8.15%

15.03%

Dividend (TTM)

Annual Dividend Rate

0.0

2.0

0.00

0.17

Dividend Yield

0.0

6.0

--

0.55%

Payout Ratio

0.3

1.1

--

0.4x

Financial Strength (MRQ)

Debt to Capital

0.0

74.0

13.59%

17.82%

Current Ratio

0.0

47.8

2.6x

2.4x

Size

Market Cap

197.0K

9.4B

$182.3M

$173.4M

Revenue

35.0K

19.9B

$143.7M

$7.2B

Shares Outstanding

905.0K

524.1M

21.7M

239.3M

Employees

0.0

35.0K

680

13,212

K=Thousands, M=Millions, B=Billions, TTM=Trailing 12 Month, MRQ=Most Recent Quarter, FYR=Fiscal Year End, NM=Not Meaningful, NA=Not Available.


Source: Thomson Reuters

The valuations are attractive. MT has a low P/E ratio versus the industry (7.8 versus 16), a low debt to capital (13.6% vs. 17.8%), a low P/S (1x vs. 2x) and a low P/B (1.3x vs. 2.8x). However, management effectiveness is lower than the industry (ROA, ROE, ROI. Thus, MT looks an attractive stock but also a speculative one, due to the difficulty to predict future earnings.

Source: Valuing Miranda Tech: Attractive But Speculative