Echelon Jacks on Blockbuster Q3 After the release of “blockbuster” third-quarter financial results, Echelon Capital Partners analyst Amr Ezzat said Redishred Capital Corp. (
) continues to present “exceptional risk-reward characteristics at current levels.”
“With many of the Company’s franchisees up for renewal in the next three years, we expect management to go cherry picking and deploy more capital into accretive tuck-ins,” he said. “The acquisitions highlight KUT’s low-risk sizeable M&A pipeline. Namely, we estimate the Company can more than double its revenues through the roll-up of its franchisees. We have recently anointed it as one of Echelon’s Top Picks.”
After the bell on Wednesday, the Mississauga-based company reported sales of $9.8-million, up 46.8 per cent year-over-year and above the projections of both Mr. Ezzat ($8.4-million) and the Street ($8.9-million). Earnings before interest, taxes, depreciation and amortization jumped 53.1 per cent to $2.9-million, also topping estimates ($2.4-million and $2.6-million, respectively).
Saying the results exhibit “exceptional earnings momentum,” the analyst added: “This is a high-quality beat driven by strong organic growth with sales from corporate locations 22 per cent higher year-over-year on an organic and constant currency basis. We expect continued strong performance.”
Maintaining a “buy” recommendation, he raised his target for Redishred shares to $1.50 from $1.25. The average on the Street is $1.35.
Others making changes include PI Financial’s Devin Schilling to $1.30 from $1.20 and Acumen Capital’s Nick Corcoran to $1.25 from $1.15. Both kept “buy” ratings.
“We view the record Q3/21 results as positive. Catalysts include acquisitions and improving operational performance,” said Mr. Corcoran.