Converge Technology Solutions Corp T.CTS

Assessment

[retiredcf]

Getting 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)

[newcoin]

I really appreciate retiredcf posting these sane commentaries. Several of them. Right now, we're dealing with a s/p dropping from $7.20 to $4.90 on no news. I wonder who is responsible for that?

[ddogold]

Usually it's buy the rumour , sell the news . Hopefully here it will be the opposite . It certainly seems like the sell off is way overdone . My only concern , not that I profess to know much about it , is that technically the chart has suffered great damage . We shall all find out in a few days how it all plays out . GLTA 

[newcoin]

All the big tech stocks have had their charts technically damaged. Take a look at Amazon or Google. They all look the same. Those companies will survive and return and so will CTS. In fact, I think the algorithm involved in this CTS issue is just modelling what has happened to Amazon and Google. The difference is that Amazon and Google have already come out with news and CTS has not. In any case

[AlwaysLong683]

My guess: Rising interest rates, Rising Inflation, and perhaps the start of Tax Loss Selling.

[newcoin]

Probably everything you say is true. But it's worth noting that CTS decline is perfectly timed with the general tech decline but CTS has not shown any numbers yet.

[AlwaysLong683]

CTS is scheduled to release their Q3 2022 on November 8 after market close. We shall see if that moves the needle depending on the status of their debt, how much profit they generated in the quarter, and the general mood of the market toward tech stocks and tax loss selling.