Post by
smallcap87 on May 19, 2017 5:07pm
Current Valuation Math and Other Thoughts
Current Valuation Math:
Trailing EBITDA: ~USD$2.8m
Market Cap: ~USD$15.6m (@ CDN$0.80 sp, 1.35 USD/CAD fx rate)
Cash: USD$4.4m
Enterprise Value: ~USD$11.2m
Implied Enterprise Value-to-Trailing EBITDA: 4.0x
Estimated F2017 EBITDA as of YE 2017: ~USD$3.0m (easy comp in coming quarter vs. last year FQ4)
EV-to-2017 Estimate EBITDA: 3.7x
Note that the most recent quarter included some one-time costs for director travel, and some other sales and marketing initiatives; one could reasonably normalize (i.e. add to EBITDA) an additional ~$100k. One must also be curious about the reason for the additional directors fees -- are there material strategic announcements to come in the near future that have required board attention recently?
Epicore through a difficult 2016, generated $2.0m of EBITDA for the year. $2.0m was the sustainable level of EBITDA through 2015 and 2016. Now, Epicore has generated $2.0m of EBITDA in the last 6 months alone, and the company has a great shot at achieving $3.0m+ EBITDA for the year.
Generally, results are starting to show good momentum, even in the face of continued industry headwinds. This is a sign of good market penetration and that its products are becoming more widely accepted, and most importantly, mission critical for shrimp farmers. A reasonable case can be made for Epicore to achieve $4.0m of annual EBITDA. That would be a wonderful outcome for shareholders.
Currently, market participants appear to be erroneously focused on net income, which is and was in the quarter affeted by timing of taxes. Participants seem to be ignoring that $1.3m of cash was generated in the quarter alone. Many participants are short sighted and not able to withstand the significant volatility that comes with an illiquid stock like this. Therein lies the opportunity for the patient shareholder. With Epicore, wealth should continue to be transferred from those with a short time horizon, to those with a longer time horizon.
Comment by
linpaws on May 20, 2017 9:13am
Nice post. Appareciate the valuation. Based on DCF, this one is worth well above $1.50. Just need to be patient.
Comment by
digitel on May 20, 2017 10:34pm
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