From YesterdayJust initiated a position a few minutes ago. GLTA
Why the big drop in share price when the earnings appeared to be good?
DSG is now trading at 28x times forward EV/EBITDA. In 1Q-2024, DSG’s revenue grew 11% to $151.3M, in line with estimates and EPS of $0.43 slightly missed the estimates of $0.47. EBITDA margin also improved to 44% in the quarter compared to last year's 42%. The balance sheet is strong, with a net cash position of $231M. The company continues to execute, its acquisition pipeline remains healthy. DSG trades at a premium valuation relative to other serial acquirers but is largely justified due to the predictable execution and high-quality portfolio of businesses. Although DSG reported numbers that slightly missed estimates, the fundamentals remain intact. We think part of the main reason for the share price decline today is because software businesses (large or small SaaS companies such as ADBE, INTU, NOW, etc.) all are down meaningfully along with CRM after the company reported a weak quarter. (5iResearch)