AssessmentGetting lots of questions given the performance of the SP. GLTA
Can you please comment on two items for Converge: the level of share dilution over the past couple of years, and the percentage of goodwill on the balance sheet. Are either of these concerning? Need to be watched? What about the likely future trajectory for these factors? I am considering taking a position here. Share count 2018 75.7M; 2019 77.4M; 2020 162.9M; 2021 214.9M; now 213.8M. Goodwil (same years): $32M; $80.3M; $110M; $323M; June 30 2022 $421M. Both trends need to be watched, and as noted there is now at least a stock buyback in place. But this is what happens when a company does more than 25 acquisitions in four years. The growth in these metrics has been backed up with big gains in revenue and profit. Going forward, a goodwill writedown is always a risk, but as long as the purchases are profitable this is less likely. The share count will depend on new deals and the buyback. At 14X earnings, with a clean balance sheet, we think it is attractive, though of course not risk-free. (5iResearch)