Q: I’m looking at your recent comments that SIS still has good long term prospects in spite of their new issue to pay off debts. Having looked at their 7% drop I was thinking about adding to my position, but I see it is still selling at 25x earnings!
Do you think this price is justified? And would you expect there to be more price volatility up or down in the near future, ie meriting holding on for more price correction?
Do you think this price is justified? And would you expect there to be more price volatility up or down in the near future, ie meriting holding on for more price correction?
5i Research Answer:
If we look to 2024 numbers, considering we are closing in on the last quarter of 2023, P/E drops to 16X, which we consider decent for new buyers. The deal surprised some, but there may be discussions that made an equity sale important (an acquisition opportunity). It was good to see insiders come in for more than $3M of the deal as well. The drop is a bit larger than usual but not atypical for a large bought deal. We would expect it to settle.