Q: with annual rev $1.4 bln DCFlow $9.39, street targets $9-$12 and trading today
at 5.74, help me with what am i missing or is it simply tax loss selling and a buy opp.
many thanks
at 5.74, help me with what am i missing or is it simply tax loss selling and a buy opp.
many thanks
5i Research Answer:
Investors may view DNTL as a 'failed' IPO and just want out. It went public in 2021 at $14 and except for a brief period never went much above that (high $14.40 November 2021). Down 35% this year certainly tax loss selling could be a factor. It also has a very high level of debt making it risky in a bad economy/bad market. Debt is nearly 10X cash flow. Revenue missed estimates last quarter. Also, based on consensus, it is not expected to show much EPS growth in 2024. So investors see a debt-laden company with little growth, whereas many other stocks are moving sharply higher with less risk. We have posted recent comments on its debt. We agree with the market here. It is not that attractive versus other mid cap growth stocks.