Post by
retiredcf on Feb 11, 2024 9:21am
Assessment
Surprised at last week's pullback. GLTA
DE is a company that purchases other companies, and spins the cash back to investors via dividends. DE uses a mix of debt and equity to fund its acquisitions, it aims for a long-term funding target of 50% equity and 50% debt. DE's model uses leverage through debt, and depending on at the time of acquisition, either debt or equity is cheaper, this model can have its merits. DE does not generate enough free cash flow to use cash for acquisitions, however, its debt levels are 'OK', with a net debt/EBITDA at 2.6X, and its acquisitions through share and debt issuance have worked out well, with a trailing-twelve month sales growth rate of 52%. The stock has had a big run, up 109% in the past year. It is fairly small still, though, at $185M market cap. Sales rose 45% last quarter and the payout ratio is 55%. Consideirng its small size, we would be OK owning it up to a 2.5% position. (5iResearch)