GREY:ESPAF - Post by User
Post by
TallerCraigon Jul 31, 2018 7:31pm
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Post# 28394871
Q2: Solid Revenue Beat at only 0.66x EV/Sales…
Q2: Solid Revenue Beat at only 0.66x EV/Sales…Looks pretty good to me! Revenue of 7.0M (6.4M Estimate) with strong margin expansion to 75.77% (Up from 72.97% YoY) and Software Subscription Revenue up to 1.22M (Up from Q1 1.16M and Q4 1.03M).
They continue to take costs of the business model and are in the middle of transitioning to a recurring subscription model. No one said it was going to be a straight line higher but this should result in a more predictable business with higher margins and increased valuation.
Ex Cash the Business is so cheap.
1.49/share Less 0.88/share you are essentially paying 0.61/share for the company. That works out to 21.75M Enterprise Value when they are going to do 33M in Sales next year and be EBITDA positive with a increasing SaaS business.
At 0.66x EV/Sales it is way too Cheap! At minimum put a 1.0x EV/Sales but more realistically given SaaS customer wins put a 2x EV/Sales multiple on it. That considered you get a share price range of 1.84 - 2.80/share or 2.32/share at the midpoint or 56% upside.
I like the risk reward right here, Q1 was clearly the bottom. Solid Q2 with a return to growth ahead, the story has bottomed.
Someone should come buy this company it is way way way too cheap!
LONG