FormerXBC Inc XEBEQ

RE:RE:RE:Yet another TMF article, Jan 28 2021

[sumpineh]

Wow thanks again for putting everything in perpective.

tamaracktop wrote: Xebec is indeed "relatively cheap". What's lost on many investors, here and elsewhere, is that while the stock is "relatively cheap" considering today's numbers, its insanely cheap if you consider what the numbers will be further down the road. It's actually so cheap it borders on laughable.
   The fact that people get excited when analysts raise their targets is testimony to a flaw in rationale that diminishes investors' probabitity of real investment success. That flaw is the focus on short-term targets. Everyone wants instantaneous gratification, and looks forward to the promise of it.
    First and foremost, we have to remember that the vast majority of analyst targets are one-year targets. Even those are subject to constant revision.
    Investors, by their nature, rarely think very far down the road. While guessing short-term targets is fun, just as I had previously guessed $8 - $10 by Christmas, it's little more than a distraction from the ultimate goal. Thinking 2 or 3 or 4 years down the road is beyond the capacity of most investors. It requires some "thinking outside the box".
    Let's do some of that right now, thinking outside the box. Let's assume Xebec can grow their revenues at 30% yoy for the next few years. This is hardly an outlandish assumption, as Xebec's 2017 revenue growth was 53% over 2016, 2018 growth was 37%, and 2019 was 144%. Further, even if Xebec comes in at the low end of guidance, 2020 revenues will be 42% higher than 2019. If Td's forecast for 2021 is correct, Xebec's revenues will grow 171% this year.
    The assumption of 30% revenues going forward is rendered even more conservative, and easily doable, considering Xebec's bulletproof business model, and even more so still by the incipient coming of age of Boo.
     Using TD's estimated 2021 revenues and assuming revenue growth of 30%, we arrive at 2025 revenues of $542 million. Using TD's own Ebitda margins of 15.5%, which is yet again a conservative assumption, we arrive at 2025 earnings of 53 cents per share. TD applies a forward revenue multiple of 10.5 in their December report. Using that same multiple would result in a target price of $37 three years from today, on January 28th, 2024. TD has since raised their multiple assumption.
      People always balk at any suggestion that they think that far down the road. It actually isn't that far. Think of something significant that happened in your life in 2017, and think how recent that seems. Four years from today will be January 28,2025.
       One of the beauteous things about adopting a longer term approach to Xebec is that, psychologically, it smoothes out the potholes along the way, much like Xebec having come from 6 cents a share 4 years ago today despite the fact we are experiencing a historic pandemic.
      The Motley Fool writeup is very nice, but that's about it. It caters to a myopic, short-sighted view of Xebec's real potential. A potential that will be realized only by those that have the belief and confidence to stay the course.
       Xebec isn't "relatively cheap" for those who can see past the noise and see this company's destiny.  It's a flat-out poorly disguised screaming buy.