Vontier Corporation

VNT Details

Vontier Corporation (NYSE: VNT) is a global industrial technology company catering to the global mobility infrastructure market. It offers a wide range of mobility technologies, diagnostics, and repair solutions to retail and commercial fueling operators, commercial vehicle repair businesses, and municipalities, including advanced environmental sensors, fueling equipment, field payment hardware, remote management, vehicle tracking and fleet management software-as-a-service solutions, and other allied products and services. As of August 30, 2021, the company's market capitalization stood at USD 6.11 billion.

Waiver of Option to Acquire Tritium: Tritium Holdings Pty Ltd, a global developer of Direct Current (DC) fast chargers for electric cars, and Gilbarco Veeder-Root (GVR), VNT'S subsidiary, announced on August 12, 2021, that it had agreed to waive GVR's call option right to buy Tritium. GVR has been a strategic investor in Tritium since September 2018, when it bought an exclusive option to acquire Tritium.

Collaboration with TrueFill: To expand its logistics portfolio, Insite360, a wholly owned subsidiary of GVR, signed a partnership agreement with TrueFill, a next-generation gasoline technology business, on July 27, 2021. Insite360 will expand the marketplace for logistics solutions as the digital revolution of the industry continues to accelerate.

Q2FY21 Results: The company reported a sharp uptick of 35.77% in total sales to USD 724.6 million in Q2FY21 (ended July 02, 2021) compared to USD 533.7 million in Q2FY20 (ended June 26, 2020), primarily due to growth across the portfolio as well as the direct and indirect impacts of COVID-19 in Q1FY20. In addition, VNT witnessed an increase in net earnings to USD 82.3 million in Q2FY21 vs. USD 68.4 million in Q2FY20. As of July 02, 2021, its cash and cash equivalents were USD 703.4 million, and total debt amounted to USD 1.99 billion. On August 16, 2021, VNT declared a quarterly cash dividend of USD 0.025 per share, payable on September 23, 2021, to shareholders of record on September 02, 2021.

Q2FY21 Financial Metrics (Source: Q2FY21 Earnings Release, August 6, 2021)

Key Risks: In FY20, approximately 30% of the company's sales were derived from outside the US. VNT continues to increase its sales and presence outside the US, particularly in high-growth markets. Therefore, changes in global economic and regulatory landscape in countries where the company operates could hurt its financials.

Outlook: As of August 06, 2021, VNT expects its Q3FY21 diluted EPS to range between USD 0.63 and USD 0.66 and adjusted diluted EPS to range from USD 0.71 to USD 0.74. For FY21, the expected range for diluted and adjusted diluted EPS is USD 2.39 to USD 2.44 and USD 2.77 to USD 2.82, respectively.

Valuation Methodology: EV / Sales Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

VNT Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: VNT's stock price surged by only 3.79% in the past three months and is currently trading at a slightly higher band of the 52-week range of USD 26.36 to USD 39.00. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 43.98. Considering the company's growth prospects, solid margins, inorganic endeavors, associated risks, and current valuation, we recommend a "Buy" rating on the stock at the closing price of USD 36.41, up 0.64% as of August 30, 2021.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.

* Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached. 

Akoustis Technologies, Inc.

AKTS Details

Akoustis Technologies, Inc. (NASDAQ: AKTS) is a high-tech solutions provider specializing in developing and manufacturing ground-breaking radio frequency (RF) filter solutions for the wireless industry, employing its patented Microelectromechanical System (MEMS)-based Bulk Acoustic Wave (BAW) technology and a unique manufacturing process flow, (also known as XBAW), for filters used in RF Front-End (RFFE) applications. AKTS generates revenue through fabrication services and RF filters, and amplifier product sales.  It has 52 patents and 82 pending patent applications as of August 19, 2021.

Target End Markets (Source: Investor Presentation, August 2021) 

AKTS Ships First 5G Mobile Filters: On August 30, 2021, AKTS announced that it had shipped the first 5G mobile wafer-level technology (WLP) filters to its tier-1 RF component customer. AKTS expects to deliver the second WLP filter sample to this client by the end of Q4CY21 and is optimistic that it will be ready to go into production with this customer in H2CY22.

Receipt of New Order: On August 27, 2021, AKTS announced that its second WiFi 6 original equipment manufacturer (OEM) client had placed a volume commercial order for its proprietary WiFi 6 XBAWTM filters. Shipments of RF filters to the company's customers will begin this quarter.

FY21 Results: The company reported a sharp uptick of 2.70x in revenues to USD 6.62 million in FY21 (ended June 30, 2021) compared to USD 1.79 million in FY20, due to an increase in revenue from foundry fabrication services and volume of filter and amplifiers. However, AKTS witnessed an increase in net losses to USD 44.16 million in FY21 vs. USD 36.14 million in FY20. As of June 30, 2021, the company had a cash balance of USD 88.32 million and no outstanding debt.

Key Risks: A substantial portion of the company's revenue comes from large purchases by a small number of customers. Its largest customer accounted for 47% and 19% of revenues in FY21 and FY20, respectively. Excessive reliance on a few customers for revenue could harm the company's financial health in the long run. In addition, AKTS relies largely on third-party suppliers for its raw materials and component requirements in the production processes. As a result, any significant difficulty faced by the suppliers could create a potential delay in the availability of the final product and harm its commercialization efforts and revenues.

Valuation Methodology: EV/Sales Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

AKTS Daily Technical Chart (Source: REFINITIV)

Stock Recommendation: AKTS stock price fell by 43.76% in the past six months and is currently at the lower-band of the 52-week range of USD 7.31 to USD 19.15. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 46.15. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 10.76. Considering the company's growth prospects, low leverage, new orders, current valuation, and associated risks, we recommend a "Speculative Buy" rating on the stock at the current price of USD 8.74, down 12.51% as of August 30, 2021, at 12:45 PM ET. 

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.

* Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.

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