RE:Trevor Rose's Insights - Don't BUY very simplistic analysis from whichever kid at 5i wrote that report.
Evertz is going thru a transition in its customer base while maintaining financial strength. Here is what I mean:
From fiscal 2018 to the expected FY24 level, free cash flow has totalled $543 million, versus reported net income of $447.3 million in that same time frame. 121 percent of net income converted to free cash. This is excellent .
Approx $519 million has been distributed back to shareholders in the form of dividends.
the company has also spent $701 million in R&D , far exceeding its peer group. If anything, Evertz technical lead in many areas is expanding. The company doesn't expand into lower margin product segments just to grow top line, knowing that would dilute their strengths .
The target market is changing, as traditional call sign stations decline and spend less while new entrants (Apple, Amazon, DAZN, various online services) emerge and offset the decline of the traditional stations . Hence why overall revenues haven't grown much during this period,
The demands and technical require,ents of these newer entrants would seemingly be an advantage for Evertz, who are known for their technical excellence and breadth of product catalog.
Evertz is a very good business that has returned cash back to shareholders while continu8ng to fund new product development at a record pace.