Why EnWave’s Current Strong Profitability Levels are Just the Beginning
EnWave Corporation (TSXV:ENW – $1.22 CAD & OTC:NWVCF – $0.89 USD & Frankfurt:E4U – €0.76) offers industrial-scale dehydration technology for commercial applications in the food, cannabis, and pharmaceutical spaces. The Company’s Radiant Energy Vacuum (“REV™”) platforms are becoming the new global dehydration standard, as they are faster and cheaper than freeze drying, and have better end product quality than both air drying and spray drying.
EnWave reported revenue of almost $6.78 million in the third quarter of fiscal year 2018, ended June 30, 2018, compared with $4.67 million in the same period last year. This was the Company’s highest quarterly revenue ever.
The Company also continued to be cash flow positive with cash flow from operations – prior to changes in non-cash working capital – of $1.63 million for the first three quarters of 2018, compared to $284 for the first three quarters of 2017.
Moreover, if EnWave didn’t have to book a one-time impairment charge of $865,000 due to the ending of the collaboration agreement with Sutro Biopharma, the Company would have achieved an awesome net profit of $761,000 in the third quarter.
The strong performance is mainly due to the expanded distribution of the crunchy snack Moon Cheese with additional product rotations in a number of Costco divisions. The strongly increased number of distribution points resulted in total Moon Cheese sales of $5.17 million in the third quarter of 2018, up 173% compared with sales in the third quarter of 2017.
The decision by the US Army Natick Soldier R&D Center (NSRDEC) to purchase its own REV machine to accelerate development is a very positive indication that a large new sales agreement may be on the way. A contract to supply U.S. troops, would most likely be of a much bigger magnitude than the sales agreements currently in hand. Moreover, this could also springboard the Company forward to new sales channels, just on the basis of the positive association created by such a partnership, and the implied validation of the technology itself.
In addition, EnWave’s management remains very bullish on the entire cannabis sector and continues to work towards securing additional partnership agreements that may build further leverage both in Canada and international markets.
We reiterate our buy recommendation for EnWave Corp. with a price target of $3.66, which is 197% above today’s stock price.
Download the third quarter 2018 EnWave Corp. Company Report.
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Very positive as allways, with raised price targed??? You can raise what you want if the stock price not follow people will get tired of keeping this. Alot of them are loosing money because the are hearing more than 5 years the same riddel.
Why is the stock price @ 1.22? The need to get onto real exchange like NASDAQ or TSX main … not the VENTURE – ensure institutional investor understands ENWAVE model.
The have to stop the practice of using stock options/grants for employee reward and retention purposes. And get some real investor relations out there!
Hi William,
First of all, thank you for your comment. Of course we have raised the price target for EnWave. In fact, we have been very conservative with our price target. What would you do as an analyst with a company that makes $761,000 in Q3 2018 (excluding a one-time item) compared with a loss of $529,000 a year ago?
I tend to disagree that many shareholders are losing money at the moment. When you look at a 3-year chart, the current stock price is – except for two short periods – the highest that it has been.
I agree that a listing on a senior exchange would be better, as would it be for any company. However, note that the listing requirements are much stricter on those exchanges.
The number of stock options outstanding at EnWave is still very reasonable. If you compare it with hundreds of other publicly listed companies, you’ll find that it’s certainly not exaggerated
Finally, developing a company or product from the ground up, always takes longer than expected, and of course, I realize it’s not always easy to keep the faith. But as long as a company is moving in the right direction and continues to make progress, why would you sell any shares of that company? Again, look at the financial progress in Q3. In addition, Moon Cheese provides a sustainable source of income, this is not a one-time event. At the same time, look at the other opportunities like the US Army, Bonduelle, Merck, and also cannabis.
Cheers,
John
Enwave could be headed for 10mil quarters and beyond as soon as Q1. They now have the moon cheese production capacity to achieve 10m/quarter. With new machine sales and an expanding royalty portfolio they could start moving towards 15mil quarters in 2019. Add to that the upside from the Army and Cannabis. Dividend/Buyback conversations should be starting up soon. Share price is woefully undervalued right now. Dam will burst at some point.
Hi Don,
There is indeed tremendous potential in Moon Cheese. Moon Cheese is providing the big breakthrough for EnWave. The sales and earnings that are generated through Moon Cheese will give EnWave much more financial strength. One day everybody is going to discover this Company… and its low stock price.
Cheers,
John
Hello John,
Thank you for some clarification.
I truly believe EnWave is going to be a big winner. It has a unique technology that’s protected by many patents worldwide. Its number of new commercial agreements and technology evaluation agreements continue to grow at a rapid pace and the company has a very dedicated team.
I stated more than 5 years, because thats the periode i hold and hope for some real break through and a share price above the 1,65.
Industrial Alliance Securities and Cormark raised there price target to $1.70 its not even half of $ 3.66.
Are there no plans for a listing on a senior exchange ? Can the meet the listing requirements on those exchanges?
Perhaps some idea to give a status from some ongoing TELOA’s Like Nestle;…
Greetings,
William W.
Hi William,
Great to read that you’ve already been so patient. That will be rewarded one day…
Thanks as well for the questions. I will try to squeeze them in, although we already have a record number of questions lined up. The publication day of the interview is September 22nd. We’re already very excited as you can imagine.
Cheers,
John