RE:RE:RE:RUM Reports a 36% Increase to Income...Solid quarter with revenue and gross margin coming in just about where I expected. SG&A expenses were a little higher than I modelled ( https://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/rum-v-rocky-mountain-liquor/msg429451/#msg429451) due to PPE and other related Covid expenses. I don't really have a problem with this as it keeps the employees happy and provides a safe environment which will only increase goodwill with customers.
The stock is still dirt cheap. For example, Alcanna trades at a TTM EV/EBITDAR multiple of 3.34 whereas RUM is currently at 1.4, a 58% discount to Alcanna. The balance sheet is improving every quarter with cash + inventory now only 400K less than their debt/credit facility. As of today the credit facility has been further reduced to just 5.8 million. For comparison it was around 9 million at the beginning of the year.
Further comparing Alcanna's metrics to RUM, Alcanna generated 16.8x more gross dollars and its operating earnings were 17.8x greater than RUM's in the recent quarter. But Alcanna's market cap is 43x that of RUM's and its EV is 33.3x that of RUM's. And none of this takes into account that Alcanna is itself very cheap. I think both companies are due for multiple expansions. Even a very conservative EV/EBITDAR multiple of 4 leads to a share price of 33 cents for RUM.