MeritValue

Quarterhill Inc.

QTRHFdata completeness 100%9 fiscal years on file
The thesis, from the filings

Quarterhill Inc. earns about -1% on invested capital, below its ~9% cost of capital, with a roughly flat share count — no moat visible in the numbers. The estimate methods put fair value between $0.85 and $4.72 a share. Whether it’s worth owning at today’s price is the last question — and yours to answer, below.

i. The business — what you’d actually own
FigureFY 2014FY 2015FY 2016FY 2017FY 2018
Revenue—$102.9M1$92.9M2$134.7M3$77.4M3
Net income$9.71M4$10M5$11.1M6$10.2M7−$49.1M7
Operating cash flow$58.6M8$43.5M9$36.8M10$70M11−$8.38M11
Capital expenditure$422,00012$178,00013$48,00014$399,00015$575,00015
Free cash flow (derived)$58.2M8,12$43.4M9,13$36.8M10,14$69.6M11,15−$8.96M11,15
Total debt$44.9M16$28M17$23.1M17$3.97M18,19$2.77M18,19
Cash & equivalents$126.3M20$93.4M21$106.6M22$81.8M22$63.9M22
Diluted shares120.4M120.7M119.2M118.6M118.8M

Superscripts are receipts. Each links to the SEC filing the number came from (full list at the bottom). A derived or summed figure cites every filing line it was built from.

ii. Your slice — ownership made literal
If you owned
shares
Net assets behind them
$17.25
your share of equity
Profit it earned you last year
−$4.14
Free cash flow it threw off
−$0.75
Debt you’d be carrying
$0.23

10 shares is a claim on $17.25 of net worth that earned you −$4.14 and generated −$0.75 of cash last year, against $0.23 of debt.

iii. Is this a good business?
Moat signal · return on invested capital
-1% avg · 5y
FY14 6%FY15 6%FY16 7%FY17 6%FY18 -31%

It earned about -1% on invested capital against a ~9% cost of capital — below the cost of funding. The numbers show no moat.

seeing a moat in the numbers →
Management signal · capital allocation
−1% shares · 5y

Share count is roughly flat over 5 years — little dilution, little buyback. Total debt has fallen 94% — deleveraging.

reading capital allocation →

Signals, not verdicts — read from the filings above. Numbers don’t prove a moat; they show its footprint. You decide.

iv. What it’s worth — engine v0.6.0

The 3 estimate methods that apply put fair value between $0.85 and $4.72 a share. They rest on different assumptions, so where they diverge is the story.

DCF · Growth Exit 10Y
$4.41
assumptions (10)
  • Risk-free rate (10Y Treasury)5.00%
  • Equity risk premium5.00%
  • Beta (β)1.00
  • Equity share of capital85.0%
  • Debt spread over risk-free1.50%
  • Tax rate21.0%
  • Terminal growth2.50%
  • Projection period10 years
  • FCF growth0.0%
  • Starting free cash flow$36.8M
DCF · Growth Exit 5Y
$4.72
assumptions (10)
  • Risk-free rate (10Y Treasury)5.00%
  • Equity risk premium5.00%
  • Beta (β)1.00
  • Equity share of capital85.0%
  • Debt spread over risk-free1.50%
  • Tax rate21.0%
  • Terminal growth2.50%
  • Projection period5 years
  • FCF growth0.0%
  • Starting free cash flow$36.8M
Earnings Power Value
$0.85
assumptions (8)
  • Risk-free rate (10Y Treasury)5.00%
  • Equity risk premium5.00%
  • Beta (β)1.00
  • Equity share of capital85.0%
  • Debt spread over risk-free1.50%
  • Tax rate21.0%
  • Normalized earnings$10M
  • Growth assumed0.0%
Graham Number
not applicable
diluted EPS missing or non-positive — Graham Number undefined

Different models answer different questions — which to trust when →

v. The price question — last, on purpose
Is today’s price fair?
See live price ↗
Type a price. The ledger answers.
Or set your own belief
FCF growth, next 5 years0.0%
Discount rate (WACC)9.27%
Terminal growth2.5%
At your growth, a share is worth $4.72
The three cases
Bear0.0%$4.72
Base0.0%$4.72
Bull5.0%$5.73

Bear/base/bull growth = 0% / filed history / history + 5pp. Type a price to see the return each case implies.

Default growth 0.0%= this company’s own filed history (median-to-median FCF CAGR, clamped 0–20%). Your adjustments are recorded anonymously. They become the “what do owners actually believe” dataset.

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Sources — the receipts
  1. 40-F filed 2017-02-10 · period ending 2015-12-31 · accession 0001564590-17-001361 (Revenues)
  2. 40-F filed 2018-03-01 · period ending 2016-12-31 · accession 0000950123-18-002756 (Revenues)
  3. 40-F filed 2019-02-28 · periods ending 2017-12-31, 2018-12-31 · accession 0000950123-19-002522 (RevenueFromContractWithCustomerExcludingAssessedTax)
  4. 40-F filed 2016-02-08 · period ending 2014-12-31 · accession 0001564590-16-012432 (NetIncomeLoss)
  5. 40-F filed 2017-02-10 · period ending 2015-12-31 · accession 0001564590-17-001361 (NetIncomeLoss)
  6. 40-F filed 2018-03-01 · period ending 2016-12-31 · accession 0000950123-18-002756 (NetIncomeLoss)
  7. 40-F filed 2019-02-28 · periods ending 2017-12-31, 2018-12-31 · accession 0000950123-19-002522 (NetIncomeLoss)
  8. 40-F filed 2016-02-08 · period ending 2014-12-31 · accession 0001564590-16-012432 (NetCashProvidedByUsedInOperatingActivitiesContinuingOperations)
  9. 40-F filed 2017-02-10 · period ending 2015-12-31 · accession 0001564590-17-001361 (NetCashProvidedByUsedInOperatingActivitiesContinuingOperations)
  10. 40-F filed 2018-03-01 · period ending 2016-12-31 · accession 0000950123-18-002756 (NetCashProvidedByUsedInOperatingActivitiesContinuingOperations)
  11. 40-F filed 2019-02-28 · periods ending 2017-12-31, 2018-12-31 · accession 0000950123-19-002522 (NetCashProvidedByUsedInOperatingActivities)
  12. 40-F filed 2016-02-08 · period ending 2014-12-31 · accession 0001564590-16-012432 (PaymentsToAcquirePropertyPlantAndEquipment)
  13. 40-F filed 2017-02-10 · period ending 2015-12-31 · accession 0001564590-17-001361 (PaymentsToAcquirePropertyPlantAndEquipment)
  14. 40-F filed 2018-03-01 · period ending 2016-12-31 · accession 0000950123-18-002756 (PaymentsToAcquirePropertyPlantAndEquipment)
  15. 40-F filed 2019-02-28 · periods ending 2017-12-31, 2018-12-31 · accession 0000950123-19-002522 (PaymentsToAcquirePropertyPlantAndEquipment)
  16. 40-F filed 2016-02-08 · period ending 2014-12-31 · accession 0001564590-16-012432 (LongTermDebt)
  17. 40-F filed 2017-02-10 · periods ending 2015-12-31, 2016-12-31 · accession 0001564590-17-001361 (LongTermDebt)
  18. 40-F filed 2019-02-28 · periods ending 2017-12-31, 2018-12-31 · accession 0000950123-19-002522 (LongTermDebtAndCapitalLeaseObligations)
  19. 40-F filed 2019-02-28 · periods ending 2017-12-31, 2018-12-31 · accession 0000950123-19-002522 (ShortTermBorrowings)
  20. 40-F filed 2017-02-10 · period ending 2014-12-31 · accession 0001564590-17-001361 (CashAndCashEquivalentsAtCarryingValue)
  21. 40-F filed 2018-03-01 · period ending 2015-12-31 · accession 0000950123-18-002756 (CashAndCashEquivalentsAtCarryingValue)
  22. 40-F filed 2019-02-28 · periods ending 2016-12-31, 2017-12-31, 2018-12-31 · accession 0000950123-19-002522 (CashAndCashEquivalentsAtCarryingValue)