RE:RE:RE:RE:RE:RE:March 31st FinancialsIn this business model, you CAN'T use EPS to evaluate the business, you have to use cash flow analysis. That said, you can't use adjusted EBITDA as a cash flow measure either, because it doesn't reflect changes on the balance sheet, which are material in a consolidator strategy.
Another interesting question is why they aren't getting any lift on multiples? A key part of this strategy is to buy businesses at a private multiple, but trade at a much higher public multiple. Usually 2-3X the private multiple that are paid (eg. buy at 3-4X and trade at 6-12X).
If that was actually happening, then the enterprise value should be a multiple of their acquisition costs (and we can use intangibles+goodwill as a proxy for that number), but it isn't.
Intangibles at Sep 30 = $869m
Today's EV = $1,220m
Multiple of intangibles = 1.4X (the lift on the private / public arbitrage)
The number is similarly anemic for Hamed's other company (HIRE): 1.15
That's an interesting signal...