KUT provides shredding services and is now trading at 5.9x times' EV/EBITDA. In the 2Q, KUT.V’s revenue grew 14% to $16.75M, slightly beating estimates of $16.71M and EPS was -$0.10 missing estimates of $0.04. The balance sheet is okay, with net debt of $24M, and net debt/EBITDA is around 2.0x. The company’s growth has been quite impressive over the last few years, averaging more than 30% in the last five years, mainly through acquisitions. Growth slowed down in the most recent quarter, and profitability is also a miss on the estimate, but given the valuation we think KUT.V is quite cheap, we would be comfortable buying/owning it at this level (for small cap high risk investors) and seeing how growth proceeds. Risk is high, but it is expected to be profitable in 2024.
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