"At $70-80m free cash/assets (after payables) you're paying roughly 10x for what seems to be trough earnings. "That's the correct - but very much understated - take, I think.
If one excludes the P&L volatility from Investment Gains/Losses (which have been greatly reduced since the OZG/WIZ sale in 2020), EZL has never made less than $15m in Pre-Tax Profit over any 12-month period (that low happened in the 12-m to June 2023), as can be seen in the chart:
View attachment 5878171On average, EZL's PBT over any 12-month period has been $25m, and the peak is in excess of $35m.
Taxing those trough, average and peak PBT numbers at 30%, yields
Raw P/Emultiples of 13.7x (based on trough earnings), 8.2x based on mid-cycle average and 5.9x on a peak scenario:
View attachment 5878279Adjusting for the $65m net cash balance (cash-at-bank less net broker payables), gives valuations that are half the level of the raw multiples.
Feels very much like one of those rare situations of:
Heads: I win a lot.
Tails: I don't lose much at all.
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(20min delay)