Q: Thinking of jumping in to Nuvei. It looks like this company is set to report cash flows of more than $300+ million in 2024 and then growing more than 20% annually. Their net debt is low. They are growing sales despite the loss of a large customer. Additionally, they acquired Paya in February which has $250 million in revenue and is net earnings and cash flow positive. Paya is based in the US, and in verticals that are new to Nuvei, and less cyclical than their traditional verticals.
Is it just me or is this a screaming buy here on valuation and future growth prospects? It is only 1.5X sales and 10X forward earnings.
Is it just me or is this a screaming buy here on valuation and future growth prospects? It is only 1.5X sales and 10X forward earnings.
5i Research Answer:
We would agree with most points here, except debt. Debt and other obligations are $1.275B, still high compared with cash flow. EPS growth is still expected, and the stock is certainly cheap. But, it is in 'show me' world right now, and investors are concerned about the customer loss. Another loss of a customer would cause even more concern. It also has a credibility issue now, and it could take several quarters of strong earnings to get investors interested in it again. We think it is OK, but would not say it is a screaming buy. It has screwed up, there is work to be done here, and there is still momentum and execution risks.