Here are some numbers (based on the half-yearly report - so any more earnings will make these numbers even stronger by year-end):
=> Current Market Cap = MC = AUD 90M = USD 69.3M
=> Enterprise Value = EV = MC - Cash + Debt = 69.3 - 4 + 0 = USD 65.3M.
=> EBITDA = USD 8.05M
===> EV / EBITDA = 65.3 / 8.05 = 8.1
=> Current SP = AUD 16.5c = USD 12.7c
=> Diluted Earnings per share = EPS = USD 2.23C
===> Price to Earnings ratio = PE = SP / EPS = 12.7 / 2.23 = 5.7
Now, compare these to the standard industry ratios: NYU Stern regularly posts PE ratios and EV / EBIDTA for various industries (US based, but it's a reasonable guide):
PE:
http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/pedata.html
EC / EBIDTA:
http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/vebitda.html
Pick any industry remotely applicable to DCC and you will get ratios one order of magnitude higher than the ratios computed above. In other words, you are looking at - at least -
EV / EBITDA ratio > 20 and
PE ratio > 50.
By any of these conventional measures, DCC is now severely undervalued. Before DCC was posting any profits, some of this forums used to say that the stock is not worth anything since the ratios cannot even be applied. Now that DCC is making money, the conventional analysis tells us that currently DCC is undervalued by a huge factor,
I think if we weather the current negative sentiment for crypto and pull through with positive earnings for the rest of the year, we are in for a significant SP reversal,
Waiting for the next quarterly to affirm my thoughts!
J.
