Q: Can you please comment on E's recent Q and it's future prospects. Jason Donville at DKAM sees it as a potential multibagger and I am wondering if this is one of his rare misses or if he is just a little early.
Thanks
Scott
Thanks
Scott
5i Research Answer:
EPS of -1c missed estimates of (nil). Revenue of $6.48M missed estimates of $6.9M. EBITDA of $0.8M missed estimates of $2.2M. We think E is a decent-enough small company, but its revenue/earnings are very 'chunky'. Large contracts (or lack thereof) cause big swings in operational performance. It has decent overall qualities, and is priced 'OK' at 17X earnings. There is some debt but nothing worrying. Insiders own 27% which is good but can reduce trading liquidity. ROE has never been that high (10 year peak 16%) and that is usually a DKAM requirement. Its small size adds some risk as well. We would consider it OK but not 'great'.