Valuation Valuation Valuation... Went to look for analyst reports after it was made a top pick today as I have never heard of it but I couldn't find any. So I started looking at it and the more I dug the more I realized that this thing is dirt cheap.
This is what I came to find;
Given their Fiscal year ended today I included another 35M in revenue for Q4 on stable QoQ margins of 15%EBITDA and 10% Profit Margins which is conservative given that revenue in Q3 just grew 15% QoQ.
On a Trailing Basis this gives you a company with;
131M in Revenue (60% Growth YoY)
19M in EBITDA (160% Growth YoY)
11M or 1.63 EPS (300% Growth YoY)
The growth the company has seen in the last year has been exponential and looks to only be beginning in its LED Lighting Products and Systems division which is growing over 110% for the year which represents 75% of its business.
When you go to what price to pay on these figures is where things get real interesting. The average current value for the Auto Parts and Supply companies is 11.2x trailing P/E, 9.1x forward P/E and 0.7x Sales.
That would put Pacific on trailing 2016 numbers of 18.25 stock price or 67% above where it closed today just to bring it back to average. I think it should trade at a premium given its growth rate. Add to the fact that it is trading at 3.8x EBITDA which is about half the value it should be trading at and this thing goes higher.
The fact that I have been agonizing away trying to find growth in Magna, Linamar or Martinrea in this sector for the last 18 months pains me. Pacific's underlying business is growing faster than the underlying stock price and as a result could still double from here.
This company should be scooped up by a Magna or Linamar given its amazing growth rate seeing how much the larger players have lagged this hidden gem. For an extra bonus it trades on the TSX and not the questionable Venture.
Below 12-13 price range I think you have to be a buyer.