You prompted me to think about the low EV/EBITDA number myself. I decided to compare the number to a few other companies. Don't take the following numbers as being clinically exact as I took a few shortcuts in the interests of time.
BAP has a P/E ratio of 20 and an EV/EBITDA number of 13 with a net debt of $332m GUD has a P/E ratio of 18 and an EV/EBITDA number of 13 with a net debt of $132m AX1 has a P/E ratio of 19 and an EV/EBITDA number of 10 with a net debt of $49m SDI has a P/E ratio of 14 and an EV/EBITDA number of 7 with no debt.
So, although there's differences between the NP used in the P/E ratio and the EBITDA and those differences vary from one company to another, the impact of debt used in the EV calculation is significant when considering the variation between the P/E and the EV/EBITDA and, therefore, SDI becomes a standout. The issued capital for SDI has not changed in many years and the retained profits as a percentage of the total equity has increased each year. Pretty impressive all up I reckon. I think I might have to re-consider this.
SDI Price at posting:
95.0¢ Sentiment: Buy Disclosure: Not Held
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