Buying OpportunityI crunched some numbers.
DCM announced two acquisition for total proceeds of $26 million (includes assumed debt). I assume the company paid purchase multiples of roughly to 4.0x EV/EBITDA, and as such, I expect the acquisitions to add at least $6 million in EBITDA in 2017.
The company also made/completed reductions to its cost structure in excess of $6 million (I do not assume all of it flows to the bottomline).
For 2017, I forecast revenues of $305 million and EBITDA of $27 million. I'm counting $13 million of FCF after $4 million of capex and $6 million of paid provisions.
I see leverage peaking in Q1 at $60 million and decline to $50 million by the end of the year. The company also has room to repay the convertibles with its line of credit.
At 4.0x EV/EBITDA, which I think is a conservative value, the shares could be valued at $4.50/share by the end of 2017. This is a great buying opportunity. We could see additional M&A in the year as well as continued improvements in the company's cost structure.