RE:Just Catching Up - Multiple Expansion?Contrarian333 wrote: Wow, just catching up but I see there has been lots of commentary on SCN after the share price didn't "pop up" after the Q. You can see the sour mood of the retail crowd in the share price. That's the thing about a hoped for multiple expansion - you don't know when it will happen or what will be the catalyst to making it happen. Reitman's is a stock I have owned that was similar to SCN in terms of a crazy cheap valuation after coming through a CCAA process with shareholders intact (like SCN). The shares were up nicely off of the bottom but were stuck around the $2 mark. No apparent catalysts were on the horizon. The Company wasn't going to be buying back shares or paying a dividend in the forseeable future. In fact management was quite clear that they would be using cash generated by the business to reinvest in the business. Didn't seem to be anything to expand the multiple. Then there was an article on the Company that showed up in the business press. Not sure whether that was the catalyst or not but the stock is suddenly over $4.00. Have a look at the chart.
Unlike Reitman's SCN has a number of identifiable catalysts that could be responsible for expanding the multiple.
Various:
EBITDA is the valuation you would most likely find valuable as a bond buyer or for doing a takeover analysis. FCF is the metric you would use for deriving an opinion on shareholder value for an ongoing business.
SCN does indeed have the highest delta to nickel prices. The fact that the share price hasn't responded to this is a currently frustrating but separate issue.
Leon Bindell is a breath of fresh air around this name and imo has not made a misstep to date.
RSU/PSU 2020 settlement based on 57 cents would be approx $22.8m. Remember this money goes to previous management and so current management is incented to make that number as low as possible.
In my rush during the week I either misspoke or was misinterpreted on a couple of issues (one of each I think). Will try to be more concise in my language.
Incenting a low share price (if that's what the company is doing) would be cause for lawsuits and an investigation from the OSC. Would be a clear case of peny wise pound foolish mistake.