RE:RE:RE:It’s time for a turnaround!That's just plain wrong!
When looking at operating cash flows, you MUST include working capital changes, especially those related to growing a business like AR. These reflect cash that is consumed in that growth, and in many cases are a permanent use of cash. This cash frees up only with improvement in working capital ratios. If you want to exclude working capital changes, use EBITDA.
Secondly, they have pre-announced a REVENUE run rate of >$100mn, they have not provided a specific EBITDA forecast, just a few metrics. Don't confuse those two metrics!
Stock still looks expensive, Assuming the following:
- opening operating CF of $32million (LQA)
- operating CF growth of 50% per year for 10 years (organic and inorganic)
- operating CF growth of 10% per year thereafter in perpetuity
- annual equity increase of 10% per year
- a required rate of return of 25% per year
This thing is worth $4-5 today. So bottom line, it is fairly valued.
If you want to challenge the assumptions, feel free. But note that I have been very generous on the equity increase assumption.