I've decided to investigate how the current valuation compares to its historical standards. For this exercise, I calculated the enterprise value (Ev) and ebitda as of the date the financials were released for the years 2016-2021. To make the comparison consistent throughout the years I decided to use ebitda numbers pre ifrs-16 which changed the accounting rules starting in the year 2019. To make this slight adjustment I subtracted the lease payment which is found on the cash flow statement for the years starting in 2019.
k= * 1,000
m= * 1,000,000
Date Net debt Share price. Ev.
Feb 18,22 $ 6,799k. $3.41. $154.11m
Feb 19,21 $25,978k. $2.20. $121.08m
Feb27,20 $41,463k. $1.88. $122.679m
Feb 28,19 $34,737k. $2.17. $128.481m
Mar 1,18 $41,294k. $3.68. $200.27m
Mar 3,17 $52,226k $3.37. $180.321m
Fiscal year Ebitda Ev/ebitda
21. $77.028m. 2
20. $81.912m. 1.477
19. $68.4m. 1.79
18. $49.627m. 2.58
17. $66.381m. 3.01
16. $45.401m. 3.97
The Ev/ebitda calculation uses the enterprise value as of the date the financials were released for the corresponding fiscal years. The current Ev to ebitda as of Fri Apr 8 is calculated to be 1.939 which is below its historical average. If we take the 6 year average we get an average Ev to ebitda multiple of 2.47. In my opinion, these multiples make absolutely no sense and could re-rate higher in the future. In addition to its potential to re-rate higher is the companies operating free cash flow generation which is over 25%!
One can see from the chart that the current enterprise value is lower than fiscal years 2018 and 2017 even though ebitda is much higher. If we use the 6 year average of 2.47 we get a fair price $ 4.24.
If we use a low 3 times multiple from 2017, then the share price could reach as high as $5.19.
What is a fair Ev to ebitda multiple? Hmmm....