BUSINESS
Anterix Inc. operates as a wireless communications company. The company focuses on commercializing its spectrum assets to enable the targeted utility and critical infrastructure customers to deploy private broadband networks, technologies, and solutions. It holds licensed spectrum in the 900 MHz band with coverage throughout the United States, Alaska, Hawaii, and Puerto Rico. The company was formerly known as pdvWireless, Inc. and changed its name to Anterix Inc. in August 2019. Anterix Inc. was incorporated in 1997 and is headquartered in Woodland Park, New Jersey.
INVESTMENT RATING
ATEX is expected to continue to be Value Creation neutral reflecting capital returns that are forecasted to be in line with the cost of capital.
Anterix has a current Value Trend Rating of F (Lowest Rating).
This rating combines inconsistent signals from two proprietary PTR measures of a stock’s attractiveness. Anterix has a neutral Power Rating of 45 but a very low Appreciation Score of 6, resulting in the Lowest Value Trend Rating.
Anterix’s stock is selling significantly above targeted value. The current stock price of $31.01 compares to targeted value 12 months forward of $9.
Anterix’s very low appreciation potential results in an appreciation score of 6 (94% of the universe has greater appreciation potential.)
Anterix has a Power Rating of 45. (This neutral Power Rating indicates that ATEX’s chances of enjoying attractive investment performance over the near to intermediate term are only average.)
Contributing to this neutral Power Rating: the Communications Servics, NEC comparison group is in an extremely unfavorable position currently. An offsetting factor is recent price action has been neutral.
INVESTMENT PROFILE
Anterix’s financial strength is low. Financial strength rating is 30.
Relative to the S&P 500 Composite, Anterix Inc has moderate Value characteristics; its appeal is likely to be to Capital Gain-oriented investors; the perception is that ATEX is lower risk. Relative weaknesses include: low historical profitability, low financial strength, low expected growth, and low historical growth. Anterix’s valuation is moderate: low dividend yield, moderate P/E ratio, and moderate price/book ratio. ATEX has unusually low market capitalization.
CURRENT SIGNALS
Anterix’s current operations are eroding. Return on equity is falling, reflecting: falling asset utilization; declining pretax margin; falling tax keep rate; and falling leverage.
Anterix’s current technical position is neutral. The stock price is in a 1.4 month down move. The stock has declined 15.5% from its prior high. The 200 day moving average is in an uptrend. The stock price is below its 200 day moving average.
ALERTS
In light of this new information we are reviewing our current Overall Rating of F. This review will be completed in the next several days.
Anterix Inc (NASDAQ: ATEX) has reported E.P.S. of $0.02 for its third fiscal quarter (ending December 31) versus $-0.42 for the same period a year ago. For the latest four quarters through December 31, E.P.S. were $0.84 compared to $-2.29 a year ago.
Anterix Inc (NASDAQ: ATEX) stock closed at $31.01 on 2/14/24 after an increase of 1.1%. Moreover, unusually high trading volume at 199% of normal accompanied the advance. The stock has declined -0.6% during the last week and has performed in line with the market over the last nine months.
CASH FLOW
In 2023, Anterix experienced a very significant reduction in cash of -$62.44 million (-59%). Sources of cash were much lower than uses. Cash consumed from 2023 EBITDA totaled -$53.43 million. Non-operating sources contributed +$39.79 million (-74% of EBITDA). In 2023, there were no cash taxes paid. Re-investment in the business amounted to -$57.56 million (+108% of EBITDA). On a net basis, debt investors removed -$1.04 million (+2% of EBITDA) while equity investors provided +$9.81 million (-18% of EBITDA).
Anterix’s Non-operating Income, %EBITDA has suffered a very strong overall downtrend over the period. This downtrend was accompanied by stability for the Anterix Peer Group. (Since 2021 Non-operating Income, %EBITDA has accelerated very sharply.) In most years, Anterix was in the third quartile and top quartile. Currently, Anterix is lower quartile at -74% of EBITDA (+$39.79 million).
Anterix’s Cash Taxes, %EBITDA has exhibited little to no overall change over the period. This stability was accompanied by stability for the Anterix Peer Group as well. In most years, Anterix was in the top quartile and second quartile. Currently, Anterix is below median at 0% of EBITDA ( $0.00 million).
Anterix’s Business Re-investment, %EBITDA has suffered a volatile overall downtrend over the period. This downtrend was accompanied by a similar trend for the Anterix Peer Group. In most years, Anterix was in the top quartile and second quartile. Currently, Anterix is upper quartile at +108% of EBITDA (-$57.56 million).
Anterix’s Debt Investors, %EBITDA has exhibited a volatile overall uptrend over the period. This improvement was accompanied by an opposite trend for the Anterix Peer Group. In most years, Anterix was in the second quartile and top quartile. Currently, Anterix is above median at +2% of EBITDA (-$1.04 million).
Anterix’s Equity Investors, %EBITDA has enjoyed a volatile overall uptrend over the period. This improvement was accompanied by a similar trend for the Anterix Peer Group. (Since 2020 Equity Investors, %EBITDA has sharply accelerated.) In most years, Anterix was in the third quartile and second quartile. Currently, Anterix is slightly above median at -18% of EBITDA (+$9.81 million).
Anterix’s Change in Cash, %EBITDA has experienced a volatile overall uptrend over the period. This improvement was accompanied by a similar trend for the Anterix Peer Group. In most years, Anterix was in the top quartile and lower quartile. Currently, Anterix is upper quartile at +117% of EBITDA (-$62.44 million).
Anterix’s Cash, %Revenue has enjoyed a very strong overall uptrend over the period. This improvement was accompanied by an opposite trend for the Anterix Peer Group. (Since 2015 Cash, %Revenue has decelerated very sharply.) In most years, Anterix was in the top quartile and second quartile. Currently, Anterix is upper quartile at +2250%.
PROFITABILITY
Anterix’s return on equity has improved very significantly since 2014. The current level is 4.2% versus the high of 4.9% and the low of -6.9%.
The productivity of Anterix’s assets declined over the full period 2014-2023: asset turnover has suffered a very strong overall downtrend.
Anterix’s return on equity is above median (4.2%) for the four quarters ended September, 2023.
Operating performance (pretax return on assets) is upper quartile (3.1%) reflecting asset turnover that is lower quartile (0.01X) and upper quartile pretax margin (306.7%).
Tax “keep” rate (income tax management) is lower quartile (85.7%) resulting in after tax return on assets that is upper quartile.
Financial leverage (leverage) is above median (1.59X).
GROWTH RATES
There are no significant differences between Anterix’s longer term growth and growth in recent years.
Anterix’s historical income statement and balance sheet growth are not available.
Annual revenue growth has been -15.2% per year. (More recently it has been 46.4%.)
Total asset growth has been -2.4% per year.
Annual E.P.S. growth is not available.
Equity growth has been -7.3% per year.
No consensus growth rate forecast is available for Anterix.
Relative to the Anterix Peer Group, Anterix’s historical growth measures are highly erratic. Total asset growth (-2.4%) has been slightly above median. Equity growth (-7.3%) has been below median. Revenue growth (-15.2%) has been lower quartile. E.P.S. growth is unavailable.
Consensus growth forecast is unavailable.
PRICE HISTORY
Over the full time period, Anterix’s stock price performance has been variable and significantly below market. Between February, 2015 and February, 2024, Anterix’s stock price fell -43%; relative to the market, this was a -76% loss. Significant price moves during the period: 1) October, 2021 – July, 2023: -56%; 2) November, 2020 – October, 2021: +114%; and 3) February, 2015 – January, 2016: -55%.
TOTAL INVESTMENT RETURNS
Current annual total return performance of -17.3% is lower quartile relative to the S&P 500 Composite.
In addition to being lower quartile relative to S&P 500 Composite, current annual total return performance through January, 2024 of -17.3% is slightly above median relative to Anterix Inc Peer Group.
Current 5-year total return performance of -5.9% is lower quartile relative to the S&P 500 Composite.
Through January, 2024, with lower quartile current 5-year total return of -5.9% relative to S&P 500 Composite, Anterix’s total return performance is substantially below median relative to Anterix Inc Peer Group.
VALUATION BENCHMARKS
Relative to S&P 500 Composite, ATEX’s overall valuation is quite high. The highest factor, the ratio of enterprise value/revenue, is upper quartile. Ratio of enterprise value/earnings before interest and taxes is upper quartile. Price/earnings ratio is upper quartile. Ratio of enterprise value/assets is above median. The lowest factor, the price/equity ratio, is slightly above median.
Relative to Anterix Peer Group, ATEX’s overall valuation is high. The highest factor, the ratio of enterprise value/revenue, is upper quartile. Ratio of enterprise value/earnings before interest and taxes is at the upper quartile. Price/earnings ratio is at the upper quartile. Price/equity ratio is at median. The lowest factor, the ratio of enterprise value/assets, is at median.
Anterix has a major value gap compared to the median valuation. For ATEX to achieve median valuation, its current ratio of enterprise value/revenue would have to fall from the current level of 205.90X to 10.46X. If ATEX’s ratio of enterprise value/revenue were to fall to 10.46X, its stock price would be lower by $-30 to $1.
For ATEX to fall to lower quartile valuation relative to the Anterix Peer Group, its current ratio of enterprise value/revenue would have to fall from the current level of 205.90X to 4.57X. If ATEX’s ratio of enterprise value/revenue were to fall to 4.57X, its stock price would decline by $-31 from the current level of $31.
VALUE TARGETS
ATEX is expected to continue to be Value Creation neutral reflecting capital returns that are forecasted to be in line with the cost of capital.
Anterix’s current Price Target of $8 represents a -73% change from the current price of $31.01.
Anterix’s very low appreciation potential results in an appreciation score of 6 (94% of the universe has greater appreciation potential.)
With this low Appreciation Score of 6, the neutral Power Rating of 45 results in an Value Trend Rating of F.
Anterix’s current Price Target is $8 (-21% from the 2023 Target of $11 and -73% from the 02/14/24 price of $31.01). This fall in the Target is the result of a -21% decrease in the equity base and a -1% decrease in the price/equity multiple. The forecasted flat return on equity has no impact on the price/equity multiple and the forecasted growth has no impact as well. More than offsetting these Drivers, the forecasted increase in cost of equity has a very slight negative impact.
PTR’s return on equity forecast is 4.0% — in line with our recent forecasts. Forecasted return on equity erratic but little changed between 2015 and 2023. The current forecast is steady at the 2015 low of 4%.
PTR’s growth forecast is 0.0% — in line with our recent forecasts. Forecasted growth erratic between 2015 and 2023. The current forecast is well below the 2015 peak of 8%.
PTR’s cost of equity forecast is 3.6% — in line with recent levels. Forecasted cost of equity suffered a dramatic, erratic increase between 2015 and 2023. The current forecast is above the 2016 low of 1.6%.
At Anterix’s current price of $31.01, investors are placing a positive value of $5 on its future investments. This view is consistent with the company’s most recent performance that reflected a growth rate of 0.0% per year, and a return on equity of 4.0% versus a cost of equity of 3.6%.
PTR’s 2025 Price Target of $8 is based on these forecasts and reflects an estimated value of existing assets of $25 and a value of future investments of $-17.
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