More DM metrics to consider...Now that we have the year-end financials we can now look at a few other metrics that institutions and companies like to use to make comparisons.
From what I can see from the financials I've calculated the Enterprise Value (EV) of DM to be $44.98 million and the EBITDA is given as $15 million which gives DM an enterprise-value-to-EBITDA of 3. Values below 10 are considered healthy and DM is way under 10. Someone else can now take this number and compare it to others in the industry and I wouldn't be surprised to see DM valued way better than the majority.
Average P/E ratio's tend to range between 20 - 25. Over 25 and the company is often consider overvalued. Under 20 and the company is often viewed as undervalued. DM has a P/E of 6.1x. Again this number can be used to compare to other companies in the industry which I have in a past post and DM was again way undervalued. The industry average is 49.5x.
P/E ratio's and EV/EBITDA values are all relative to the industry, and DM is one of the most undervalued companies in their industry.
Together both of these popular metrics continue to show that DM remains undervalued.
Another metric I used in an earlier post was price-to-book ratio. DM's is 1.8x and the industry average is 12.4x. I also believe DM has one of the highest return on equity (ROE). Somewhere in the range of 42% where as the industry average is about 21%.
The net profit margin for DM is about 16 - 17% and the industry average is about -23%. Yes, negative 23%
Yes, those financials are outstanding! That's why MG was excited to present them. Again, no matter what metric one uses, every metric points to this stock being undervalued. Well done management and hopefully the market will finally begin to value this stock fairly.
As for Q1, I would expect to see a higher AI and Tech revenue and a lower covid revenue. The company is averging about $12.5 million per quarter. If DM can continue that average for Q1 that would be outstanding, but I could see Q1 being a little lower. It would still be a fantastic quarter if they can get around $10 million. I don't mind that the company was slightly under my expectation for the year-end financials because it will make it easier to match or beat the year-over-year growth for next year. It's all good according to the math, the company is doing extremely well.