GREY:XEBEQ - Post by User
Post by
tamaracktopon May 01, 2022 11:16am
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Post# 34645903
Approaching performance convergence
Approaching performance convergence Question. Why has Greenlane outperformed Xebec since early August?
First, let's look at the numbers, some of which are surprisingly similar.
I'll start with the similar one first.
Before I do that, I'd like to point out the purely coincidental similarity in their float. This has no bearing on my argument but I find it "amusing".
Xebec has 154.7 million shares outstanding compared to Greenlane's 150.3 million.
Pretty close.
I'll start with the more similar numbers and graduate to the increasingly dissimilar ones to make my case.
Xebec is trading at 2.8 X trailing revenues. Greenlane is at 2.5 X trailing.
Xebec's return on equity is -7.48%. Greenlane's ROE is -6.09%
Xebec's return on assets is -5.12%. Greenlane's ROA is -4.12%.
Xebec's debt/equity ratio is .28. Greenlane's is .01.
Both have healthy balance sheets.
Xebec's revenues in 2021 grew 117%. Greenlane's grew 145%.
Xebec will announce its backlog has grown to over $200 million .
I have no idea what Greenlane's backlog will be.
While not identical, the numbers I've pointed out are similar enough to beg a simple question..
"Why is Greenlane trading at 2.4 times book value when Xebec trade under 1.1 times book? "
It seems to me an obvious question, to anyone of sound mind.
At 2.4 times book, Xebec would trade at $4.86 today.
It seem that all of the analysts are basing their targets on assumed contraction in Xebec's P/S multiple.
I wonder what logic they're using to come to that conclusion.
If anything, I see the reverse happening.
Xebec's backlog alone, to be announced in only 8 trading days, will more than suffice to ensure
2022 revenues in excess of $200 million. This will be another year of truly outstanding revenue growth.
Revenue multiples should expand, not contract.
Xebec's revenues are growing fast enough to easily overcompensate for the negative effects of higher rates on the discounted present values of future cash flows.
As for the comparisons to Greenlane I mentioned above, it's obvious to me that Xebec is far more diversified than Greenlane, both in terms of geographically, and in terms of their business lines.
To my mind, Xebec has an infinitely greater assurance of recurring revenues.
The markets would appear to be recognizing this "paradox".
Over the last year, Greenlane has consistently outperformed Xebec since August 5th.
The performance gap is closing rapidly.
As of Friday's close, Xebec is down 48.5% over the last year. Greenlane is now down 47.73%.
Xebec's 20 and 50-day moving averages have now turned higher. Greenlane's are all still declining.
Their year-over-year performance will very soon "cross"
The analysts are bullish on Greenlane, and decidedly subdued towards Xebec.
The analysts are wrong.
Would I sell Greenlane to buy Xebec?
In a heartbeat.
The capital loss carryforward would make the next 40 or 60 or 80 percent gain on Xebec tax-free.