Q4: Back to Revenue Growth on Impressive 92% EBITDA Growth…Finally, the turn I have been waiting for to average down, Great Q but no real analyst coverage makes it’s a great stealth play with a strong 4%+ div yield. That EBITDA growth number is the most impressive number in the entire report. (I thought it was going to take another Q or two for the fundamentals to turn but they delivered to goods this Q).
The increase in coffee prices in 2016 really killed them, but I would just note that spot coffee price continued to increase in Q4 but yet they were able to grow volumes at a solid growth rate in Q4. The Business has finally bottomed as volumes have increased in the face of peaking headwinds which bodes real well for the futures Qs.
With 2016 in the rear view mirror and 2017 ahead with the major Mexican competitor losing its organic branding which is a huge catalyst for volume and revenue growth for this year. As you begin to lap 2016 quarters starting with the next Q, you are going to see impressive YoY growth rates in both Revenues and EBITDA.
The scarcity value for a quality consumer facing brand in Canada I believe it should garner a premium valuation on top of the growth prospects that it has in front of it. Throw on a yield north of 4% and it is a steal right here.
On EBITDA: On my numbers EBITDA growth for 2017 could see 30% growth to 7.5M, throw on a 12-14x EBITDA multiple given the EBITDA growth rate you will see in 2017 and you are looking at 9.50 – 11.25/share or 70% upside from the midpoint of the range
On Operating Cashflow: On continued growth in operating cashflow of 30% for 2017 gets you to 12M, throw on a 8-10x Operating Cashflow gets you to a range of 10.50-13.25/share or 100% upside from the midpoint of the range
This has been my larger strategy in 2017 looking for names with big upside that are trading well off 52 week highs where fundamentals are improving and there is a potential for a double on valuation rerating on top of strong EBITDA growth.
TPK is where I landed (Added this morning at 6.46) – Love the Dividend and Growth Prospects
LONG