I still think Reckon is undervalued. Management flagged a few years ago that the sum of all parts is more than the market cap.
- APS business was sold for 8.4x FY21 EBITDA. - The remaining business generated EBITDA of 17m in FY21 and is in a growth sector (as opposed to APS which is in a fairly stable sector). - If we conservatively use 8x FY21 EBITDA multiple for the remaining business which is profitable then the value is 136m (the market cap will be much lower than this post the 54-58cents payout).
I also think the Legal Practice management software is a dark horse - addressable market in the US is 2.4bn - currently flat EBITDA but one to watch...
Putting aside the argument of Xero vs Reckon i.e. Reckon have proven there is a market for their product (100,000+ subscribers), what am I missing here with the above numbers/valuation?
RKN Price at posting:
$1.32 Sentiment: Buy Disclosure: Held
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