Post by
stockfy on Nov 08, 2023 8:00am
DTEA: Seasonal business, Q4 is the strongest Q, Negative EV
DTEA's tea business is highly seasonal with Q2 being the slowest quarter due to warm weather and Q4 (November, December, January) being the company's strongest and most profitable quarter due to cold weather and gift holiday season.
So we just entered Q4.
Given also that DTEA's website traffic in the last month of Q3 (October) was 800,000 visitors, website traffic in Q4 will easily exceed 1 million visitors, which is a strong indicator that online Revenue in Q4 will go significantly up compared to Q3.
Moreover, debt-free DTEA does not only make profits in Q4, but also generates positive operating cash flow and positive free cash increasing significantly its cash at the end of Q4. Last year, DTEA generated about $8 million in free cash flow in Q4.
DTEA's cash was $14 million at the end of Q2, so it's expected to exceed $20 million at the end of Q4, while the debt will remain zero.
So DTEA's Enterprise Value now at $0.53 is deep in negative territory and DTEA now at $0.53 is dirt-cheap.
In brief, the worst (Q2) is behind us, and the best (Q4) is ahead of us.