RE:RE:Inflation taking bite out of new infrastructure projects Maybe not. Maybe it is.
The volatility in earnings and sensitivity in the overall economy is much higher with ITS. The patent business is virtually uncorrelated to the market. But it is dead anyways so that doesn't matter.
ITS was cheaper than software companies which is why John and Paul focused on it. But it was cheaper for a reason. Huge volatility in earnings and exposure to the inflationary effects of road and highway construction.
In addition with the cost of money rising, this increases the likelihood that there will be 1. An ITS earnings recession 2. Contraction of multiples to the historical 5-7X level (5X for small cap ITS firms), which is in line with Todd's downside case.
The stock has only priced in lower earnings ahead from margin pressure. But the multiple hasn't changed at all.