RE:RE:RE:RE:RE:LSPD vs ATMy answer is.. maybe. Certainly, they generally have a good track record with acquisitions bar one that proved to be poor but that was very early.
In terms of Q3, it depends on what the causes of the bad Q3 results are and whether they are indicative going forward. My own sense from the conference call is that the CEO is overly arrogant and aloof. Given the amount of shares he sold, it's not a surprise.
The way I look at it is that the CEO and management are key to success for sustainable growth and I like to invest in companies that have highly competent CEOs that are driven for success, humble enough to know when they're wrong and can augment accordingly.
My own opinion, is that this CEO possesses none of those traits and is likely psychologically compromised due to Dunning-Kreuger of the stock going parabolic and cashing out for a very comfortable life.
Given the industry is gowing at an average CAGR of 30% and they are growing a much slower rate yet the CEO blames COVID you know that something else is afoot.
Regarding valuation, yes, they look cheap on all measures but growth has undeniably slowed.
Moreover, I think it's clear from the stock price that Q4 will be weak comparitively speaking. Q4 is traditionally their strongest Q by far. If Q4 was going to be a banger they would have pre-released something to that effect, especially before the Growth conference they presented at. The small insider buying of shares at end of December don't tell me much given the amount of selling done in 2021.
Hope that helps.
Capharnaum wrote: truthis0utther3 wrote: 5) is the company trading at a discount to the summation of its annual discounted free cash flow?
Bottom line is this:
If you think they can grow revenues 25% while maintaining margins I think this is a winner. That assumption predicates itself on the success of illumin which so far has proven to be a red herring.
It seems like this stock is much more likely to be a value trap. Meaning, it looks cheap but organic growth is lacking and the only way for them to grow is by acquisition. If that is the case, the stock is likely to drift lower over time as rates rise and investors look for income (i.e. dividends) in the absence of growth.
The worry here is that there seems to be little growth and no income. Not a good place to be in a rising rate environment.
I'm currently looking into the stock.
In your analysis, you can't seem to tag up the share price vs the growth rate, that growth might not be straight up as the legacy business dries up but that short term slowdowns might be a buying opportunity that would have never been there if Q3 didn't happen?
Also, about the rates thing, doesn't that work both ways? As in, if rates are higher, then acquisitions would be cheaper?
It seems to me that since they have a decent FCF coming in, they couldn't be a value trap unless they bought overpriced companies? In the sense that eventually, in time, their accumulated cash would exceed the market cap? (Yes, it would take a while at the current pace, 7-8 years at stable margins)