DragonWave Inc

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DRWI : NASDAQ : Technology
$4.60 | %
Today's Range: 4.18 - 5.18
Avg. Daily Volume: 91,800
07/29/16 - 4:00 PM ET

Financial Analysis


DRAGONWAVE INC's gross profit margin for the first quarter of its fiscal year 2016 has significantly increased when compared to the same period a year ago. Even though sales decreased, the net income has increased. DRAGONWAVE INC has very weak liquidity. Currently, the Quick Ratio is 0.43 which clearly shows a lack of ability to cover short-term cash needs. The company's liquidity has decreased from the same period last year.

At the same time, stockholders' equity ("net worth") has significantly decreased by 96.12% from the same quarter last year. The key liquidity measurements indicate that the company is in a position in which financial difficulties could develop in the near future.

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Income Statement Q1 FY16 Q1 FY15
Net Sales ($mil)12.5526.34
EBITDA ($mil)-2.9-4.94
EBIT ($mil)-3.46-5.6
Net Income ($mil)-4.1-5.95


Balance Sheet Q1 FY16 Q1 FY15
Cash & Equiv. ($mil)3.9518.91
Total Assets ($mil)48.42113.59
Total Debt ($mil)18.9234.33
Equity ($mil)1.4838.14


Profitability Q1 FY16 Q1 FY15
Gross Profit Margin31.0221.07
EBITDA Margin-23.11-18.76
Operating Margin-27.57-21.25
Sales Turnover1.51.37
Return on Assets-83.54-18.34
Return on Equity-2740.51-54.65
Debt Q1 FY16 Q1 FY15
Current Ratio1.022.43
Debt/Capital0.930.47
Interest Expense0.420.6
Interest Coverage-8.3-9.3


Share Data Q1 FY16 Q1 FY15
Shares outstanding (mil)3.623.01
Div / share0.00.0
EPS-1.23-2.0
Book value / share0.4112.66
Institutional Own % n/a n/a
Avg Daily Volume120191.0341338.0

Valuation


SELL. The current P/E ratio is negative, which has no meaningful value in the assessment of premium or discount valuation, it simply displays that the company has negative earnings. For additional comparison, its price-to-book ratio of 10.84 indicates a significant premium versus the S&P 500 average of 2.81 and a significant premium versus the industry average of 3.09. The price-to-sales ratio is well below both the S&P 500 average and the industry average, indicating a discount. After reviewing these and other key valuation criteria, DRAGONWAVE INC proves to trade at a premium to investment alternatives within the industry.


Price/Earnings
1 2 3 4 5
premium   discount
  Price/Cash Flow
1 2 3 4 5
premium   discount
DRWI NM Peers 27.55   DRWI NM Peers 12.38

Neutral. The absence of a valid P/E ratio happens when a stock can not be valued on the basis of a negative stream of earnings.

DRWI's P/E is negative making this valuation measure meaningless.

 

Neutral. The P/CF ratio, a stock’s price divided by the company's cash flow from operations, is useful for comparing companies with different capital requirements or financing structures.

DRWI's P/CF is negative making the measure meaningless.

 
Price/Projected
Earnings
1 2 3 4 5
premium   discount
  Price to
Earnings/Growth
1 2 3 4 5
premium   discount
DRWI NA Peers 18.33   DRWI NA Peers 0.62

Neutral. A lower price-to-projected earnings ratio than its peers can signify a less expensive stock or lower future growth potential.

Ratio not available.

 

Neutral. The PEG ratio is the stock’s P/E divided by the consensus estimate of long-term earnings growth. Faster growth can justify higher price multiples.

Ratio not available.

 
Price/Book
1 2 3 4 5
premium   discount
  Earnings Growth
1 2 3 4 5
lower   higher
DRWI 10.84 Peers 3.09   DRWI -71.09 Peers 51.41

Premium. A higher price-to-book ratio makes a stock less attractive to investors seeking stocks with lower market values per dollar of equity on the balance sheet.

DRWI is trading at a significant premium to its peers.

 

Lower. Elevated earnings growth rates can lead to capital appreciation and justify higher price-to-earnings ratios.

However, DRWI is expected to significantly trail its peers on the basis of its earnings growth rate.

 
Price/Sales
1 2 3 4 5
premium   discount
  Sales Growth
1 2 3 4 5
premium   discount
DRWI 0.22 Peers 3.14   DRWI -53.33 Peers 10.39

Discount. In the absence of P/E and P/B multiples, the price-to-sales ratio can display the value investors are placing on each dollar of sales.

DRWI is trading at a significant discount to its industry on this measurement.

 

Lower. A sales growth rate that trails the industry implies that a company is losing market share.

DRWI significantly trails its peers on the basis of sales growth

 

 

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