What is enterprise worth...reallyEnterprise’s management has been telling us for more than 3 years the company is grossly undervalued based on reported book values (we won’t discuss the value of this metric). Let’s have a look and see if this is indeed reality. Assets as at June 30 $64.6M, less intangible assets (goodwill, patents, deferred taxes etc.) and liabilities; NET assets are approximately $48M. Now let’s review the lucrative employment contracts for the masterminds running the show; Jaroszuk, O’Kell, and Cabral. Their employment contracts made publiuc a few years ago could see these three bandits sharing up to $8M if the company is sold! So net assets are about $40M or say 0.72/share. The math is easy when you do your homework.
This begs the question why Enterprise has been trading at a “discount”. Possibilities; weak cost containment as margins have declined in a recovering oil and gas economy, inability to effectively deal with competition, wrong complement of assets, ineffective at growing the company (remember back in 2014 all the hype about Direct Pipe! Investors heard of one completed job), unrealistic strategic plans (Enterprise will never be the largest specialized rental company in western Canada). The market has many inefficiencies however, they do not last three years.