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Radio technology specialist MTI Wireless Edge (LSE: MWE) has outperformed the wider market with a 50% share price rise over the last 12 months. It’s been a bumpy ride, but shareholders have done well over the last year.
MTI has a market-cap of just £52m. But unlike many small-cap tech stocks, MTI Wireless has a 15-year history on the London market and has been profitable every year since 2013. That’s quite an unusual combination — I reckon this dividend-paying stock could be worth a closer look for me.
49 years of family ownership
MTI Wireless Edge makes radio antennas for commercial, military and RFID applications. Examples include vehicle-mounted antennas, products for 5G and Wi-Fi, and military antenna systems used on ships, and submarines. The company also has a division that supplies wireless irrigation systems.
The company was founded by Zvi Borovitz in Israel in 1972. Borovitz remains the company’s chairman. Family member Moshe Borovitz is chief executive, and the wider family still controls about 30% of the company’s shares.
I see this as a potential attraction. In my experience, companies with long-standing family ownership are often run with a focus on sustainable long-term growth. Owner-shareholders often have most of their net worth tied up in a business. They may also get much of their income from dividends.
MTI Wireless Edge has delivered a mixed stock market performance since the company’s London IPO in 2006. But investors who bought during the last five years have seen decent gains — MWE’s share price has risen by 190% since June 2016.
A steady grower
Growth slowed last year due to sales disruption caused by Covid-19. Revenue rose 2% to $40.9m, but the company’s pre-tax profit climbed 19% to $4.1m. Earnings per share were 17% higher and the group ended the year with net cash of $9.4m, an increase on 2019.
Shareholders were rewarded with a 25% dividend increase, giving the stock a yield of about 3%.
This solid progress has continued in 2021. Revenue rose 4% to $9.95m during the first quarter, while pre-tax profit was 25% higher, at $0.9m. The company says the global rollout of 5G mobile networks is creating new demand from both network operators and phone manufacturers.
MWE share price: high enough already?
MTI Wireless Edge stock surged to a high of more than 90p earlier this year, but it’s since fallen back to just under 60p. At this level, the stock is trading on 26 times 2021 forecast earnings, with an expected dividend yield of 3.4%.
In my view, the MWE share price got ahead of events earlier this year. The current level looks about right to me, although I’m not sure the stock’s cheap.
Another concern for me is that this is an overseas business with strong insider ownership. UK shareholders aren’t likely to have much influence over management, in my view.
Even so, I’ve been impressed by what I’ve learned of MTI Wireless Edge so far. This stock is a little smaller than I usually buy, but I’ve added the stock to my watch list for further research.
The post What’s happened to the MTI Wireless Edge (MWE) share price? appeared first on The Motley Fool UK.
Roland Head has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
Motley Fool UK 2021