RE:RE:Great news today for shareholders but sad day for employeesYes, they are growing through acquisitions, the envelope business is in decline. That is why this company will never trade much more than 10 times earnings in my view. Trading at less than 6 times now. The packaging side does have organic growth however, and will become a bigger component over time.
Overpaying I guess is subjective, but I'm not sure where you get the 'overleveraging' idea. At Sept 30, they had $63 million outstanding on their credit facility. They disclosed that they could borrow another $30 million and still be within their financial covenants. So they could increase the debt by 47% if they needed to. Obviously the banks do not think the company is currently overleveraged.
Over the last two quarters, they paid back $10 million in debt with the strong free cash flow they generate. At that rate, they could repay all the debt taken on to buy Royal next year, and would be debt free in just over three years from now. This is why I am confident they will restart a dividend in 2021.