It's hard to predict where the share price will be in a month after the 4C quarterly is released. Basically the market will decide. I just hope that TNT finally attains a valuation that is consistent with our ASX peers and cyber security stocks in general. I don't believe our EBITDA can be used to do a reliable valuation because it will be heavily perturbed by one-off acquisition costs, as JC has mentioned. The next best reliable measure of a valuation is probably the EV/sales ratio. Hard data on EV/sales for cyber security is difficult to find, but an international study in 2019 showed it was around ~5.5x , and it was then trending upwards too (see post #50412092 ). FZO just posted ~$18m revenues for FY21, so their EV/sales ratio is 15.5x. Even Nuix with all its problems and woes has a ratio right now of ~4.8x (down from ~20x). Our current EV/sales as of COB today is ~2.5x (assuming say A$110m/y sales with EV=$277m). We really should have at least an average EV/sales of ~5.5x, and probably a bit higher than that would not be unreasonable for a market leader. That would imply an EV >$609m, or a share price of >57c. About a year ago, some people here were predicting the share price would reach the 50c-60c range based on the $40m/y RRR target for the end of FY20. But TNT is a different beast a year later. It has grown considerably, as now has an RRR of more than $180m/y. It looks to me that TNT is now very much undervalued again.
All IMHO, DYOR
TNT Price at posting:
26.0¢ Sentiment: Buy Disclosure: Held
