On Monday the 14th of May, LightPath Technologies (NASDAQ: LPTH) released Q3 earnings results for fiscal year 2018. There was a beat on EPS with $0.04 and on revenue with $8.5M (+0.1% Y/Y). The company sells to civilian consumers, but also to the U.S. military in the realm of infrared optics. Of equal or more value is LightPath addressing the industry of autonomous vehicles, which Ford Motors will have in operation by end of 2021.
LightPath may or may not have Ford as a customer, but it is selling supportive components for autonomous driving: "LightPath’s product development efforts include advanced driver assistance systems (ADAS), light distance and ranging (LIDAR) sensing, and spectrographic and fiber delivery technologies."
The stock shares have approached near 52 week lows near $2 PPS. The historic stock price shows that the range jumped to $4 PPS in 2017 and mid $3 PPS in 2016. A stock screen through FinViz shows promising comparisons within the Industrial Electronic Equipment industry.
Among the micro-cap stocks in the industry, there are five with a P/E under 15. With micro-cap stocks there is always the patient parrel of low volume trading. An investor or trader can be stuck for awhile without significant price movement. LightPath has recently shown 80,000 shares trading within the day. Highpower International had the second most at 7,750 and the lower was had by The LGL Group at 1,800. Only LightPath of this group would be of decent volume.
FinViz does not tabulate the FCF Yield, but instead uses a metric called Price to Free Cash Flow or P/FCF. The FCF is likely taken from trailing twelve months (TTM) of data. The following is a quick comparison of P/FCF for the aforementioned taken 05/09/18. The other two companies under 15 P/E had negative P/FCF.
LightPath Technologies has the better value in the P/FCF metric and by a large buffer.
The past two quarters/6mo mark showed an operating cash flow (OCF) of $1,618,241 and a capital expense (CapEx) of $1,900,582 . This left the company with negative FCF. Although positive FCF was intact with a TTM perspective, the 6mo mark was a possible warning sign. A further look showed that the CapEx was elevated due to exceptional circumstances, an initiative for R&D, and partly due to the acquisition costs of ISP Optics.
With an update from Q3/9mo mark, the FCF situation turned positive even with the continued heavy investment in capital assets. The OCF increased to $2,672,711 and the CapEx trailed with $2,481,715; giving LightPath Tech a FCF of $190,996.
When the FCF is compared to the market capital for a yield we arrive at 0.34%.
Free Cash Flow is obtained by taking the value of the company's operating cash flow and subtracting from it the value of capital expenses. The yield is then formulated by dividing the result by either the market capital or enterprise value.
Disclosure: I/we are long LPTH, F.