RE:RE:CIBC never had research coverage on STCPossibleidiot01 wrote: I acknowledge your correction , marketbeat does some strange things with current prices but usually is reliable.
Since you seem to be actively posting on Sangoma - what's your thought about this email ? I sent to retiredcf awhile back ( which has gone unread - not upset by that because they work hard)
"Here's an exercept from the first BMO report ( December, 2021) on the company ; I'd be interested in your reaction. I'm not impressed by that ROIC.
"We estimate that Sangoma has deployed
over C$700 million in capital on acquisitions, funded by C$116 million in equity (at a weighted average
price of C$12.93 per share), $151 million in debt, and the balance in cash and future share issuance.
Through this period of significant investment, management maintained a solid discipline for organic
growth and cash flow margins, which have averaged 10% and 14%, respectively, over the last 10 years,
and average ROIC of 3.7% over the last five years, despite a 29-fold increase in invested capital over the
same period (excluding adjustments for one-time costs).
To: | retiredcf |
Date: | 6/7/2022 9:19:24 AM |
Subject: | Sangoma Technologies" |
I calculated net income to the firm at approximately US $30m on invested capital of about $410m or an Roic of
~ 7.3%
I expect in the coming years for this number to exceed 10% as cost synergies and cross selling opportunities takes place.
As long as Roic is above its weighted average cost of capital then growth provides economic value to shareholders.
Either way you look at it, more importantly, is that free cash flow to equity holders exceeds 15% and as long as it's return on equity exceeds its cost of equity, then growth by by acquisition provides value to shareholders. Otherwise, the company would be better off paying a 15% dividend yield.