ENGH is now trading at 22x times' Forward P/E. Revenue was in a decline in the last two years after a very strong 2020, which was partly covid-driven. The balance sheet is strong, with net cash of $160M. ENGH could see upside potential when management ramps up on acquisitions. ENGH is still a decent company with a solid portfolio of businesses (high gross margins, in the 70% range). The multiple ENGH is trading also at the lower range of historical averages (ranging from 22x to 37x). We think ENGH is a HOLD for now, we would want to see management do something with the cash balance to create shareholder value (either do more M&A or buybacks). We would reconsider the position a while from now if management does not show improvement in capital allocation.
5i Research Answer: