Q: Caldwell released Fiscal Q3 and YTD revenues are up significantly and Q4 outlook seems strong. CWL currently has a EV of about $13 million and revenues for FY 2025 should exceed $100 million. I noticed a FX 800K loss this Q notwithstanding Q3 EPS was still $0.03. Valuation thoughts?
5i Research Answer:
CWL is a decent small company but its tiny size keeps investor interest low. Its results are also highly variable which does not help things either. Sales were up nicely year to date but did decline in the quarter, as did profit. It continues to pay its dividend but it was omitted four four years starting in the pandemic. It remains debt-free with about $9M cash. Insiders own 18%. We continue to think that it is a company that might be better off privatized (there was a bid many years ago). Its size and earnings volatility likely ensure it will never get a huge valuation multiple, even when business is good. With negative momentum and a market cap of only $24M, we don't see it as highly attractive today.