Some short-sighted investors along with some short-term traders sold CZO this morning. Nothing strange. There are always those who are unable to see the big picture. And the big picture is that CZO reported excellent quarterly results for another quarter in a row while the outlook remains bright:
1) Ceapro remains a profitable business with revenue YoY growth and sequential growth.
Specifically, Q3 2021 record sales of $4,523,000 compared to $3,476,000 for Q3 2020, representing a 30% increase, while net profit of $875,000 for Q3 2021 versus net profit of $192,000 for Q3 2020, a 356% increase.
2) Increased net profit for the third quarter of 2021 comes from improved margin of 65.2% as compared to 47.8% in 2020.
3) Ceapro maintains a fortress balance sheet with zero cash and a lot of cash to fund both organic growth and inorganic growth (acquisitions).
4) With CAD$7.3 million cash and zero debt, Ceapro's Enterprise Value currently is just CAD$37 million.
5) Given that adj. EBITDA in 2021 will be about CAD$5.5 million, CZO trades only 6 times its adj. EBITDA.
The peers trade above 10 times their adj. EBITDA and many of them lose money.
6) CZO is a takeover target and there is no question about it.