Q: Adentra released results last night. Any thoughts? Seems like an OK company to me, but there isn't much growth in their business. When the economy is booming they make a lot of profit, but otherwise, it's rather boring. Dividend is OK, but nothing special, at 2%. Would you sell it if you held it?
5i Research Answer:
ADEN is priced right at 10x earnings but its business is highly cyclical. Its small size also adds extra risks. Plus, it is quite leveraged, with debt at 3x cash flow. Insiders own 5%. We don't hate it, but with leverage, highly variable earnings and its small size, we do not find it compelling in a market where everything else is flying. We would be fine selling it.