A Growing Business Priced Below Liquidation Value

Plus a $70M operating business and $19M in net-cash thrown in for free.

Today’s business has a market cap of roughly $30M and an enterprise value of roughly $13M USD.

Last year it generated around $7.5M in FCF.

The tangible book value is almost $70M and it has net-cash of roughly $19M.

Over the last 5 years, the average amount of FCF per year has been around $2.8M.

The business model is very stable.

Revenues have grown from around $57M per year in 2018 to over $70M today.

Operating cashflows and FCF has also grown steadily over the same period, and both hit all time highs last year.

Here are the valuation metrics:

NCAV Ratio = 1.4

TBV Ratio = 0.45

EV/5Y FCF Ratio = 4.5

P/5Y FCF Ratio = 11

P/FCF Ratio = 4

The business has consistently paid a regular dividend and continues to do so.

The NCAV ratio also points to a business that is highly liquid. 87% of current assets are cash and invoices.

Right now, the business is priced at half its liquidation value, which seems absurd for such a reliable cash-machine that has been plodding along for over 70 years.

When I dug into the reports, I found growth and transition rather than structural decline and decay.

The operating business, imo, is worth significantly more than zero and there are no signs of any impending collapse.

Quite the opposite in fact.

Let’s take a closer look….