RE:RE:RE:RE:RE:RE:Small Buybacks restarted & Short Report IncreaseGOLDSILVERBAR wrote: Ok well, look, their cash flow just collapsed 66%, EBITDA for the first quarter went from 17.4 to 5.9M, so the shares are still trading a huge multiple based on that collapse, care to comment?
The lack of traction related to their transition to tier 1 US Titles is certainly frustrating. It is hurting the EBITDA margin hard. If you believe management, that's the path to growing to 6-8% market share with 50-55% EBITDA net margins. When they get there, that would mean around $15M EBITDA from US titles each quarter.
Current EBITDA for US titles probably isn't indicative of long run EBITDA, but may linger for the first half of 2022.
FCF (MDA p.16) was $5.2M, down from $9.8M last year. Based on the quarter FCF, shares would be trading at 22x at current price.
Unfortunately, until they "prove" that their transitory path in US Titles is working out, share price weakness will likely continue. Looks like their new clients are really satisfied but shareholders want to see results.
I think that the long term value of REAL is still compelling but at the same time I'm disappointed by the US Titles results and I believe management should have been more upfront about the effect of their strategy on EBITDA/FCF. In the meantime, they will keep buying back shares which should be beneficial long term for the shareholders.