I think the stock got a bit over-bought when it surpassed $7 and...

I think the stock got a bit over-bought when it surpassed $7 and possibly driven by the general euphoria that has gripped so-called 'tech-stocks' in particular during the 'pre-covid vax. era' (for want of a better word).

Interesting to note how the NASDAQ corrected after the Pfizer announcement, as did DTL, which may have popped the tech bubble for the time being. Most commentators seem to agree that tech stocks may have got ahead of themselves valuation wise. Thus, this 'correction' in my view, should be seen as a healthy reality check and allow earnings growth to catch-up with valuations, as they should in the case of high-quality cash-generative companies (of which DTL is one imo).

One line to draw from the above is not to be overly concerned with short-term gyrations but rather focus attention on understanding the quality of DTL's business model and the competency of its management. This ultimately will give insight into the drivers of DTL's intrinsic value which conventional wisdom describes as the present value of future free-cash flows.

To better understand the capacity of DTL to generate the latter, my personal assessment of some of its key criteria goes like this:

• The quality of its business model, namely:
• Porter analysis (solid);
• Economic value (high.... compare DTL's ROE to its WACC);
• Recurring revenue (60% plus...big tick);
• Free cash flow generation (strong)

• Management
• Insider ownership (would prefer to see insiders own more);
• Insider buying (always a good sign and CEO recently bought stock $200k of stock at $5.86)
• Competent leadership (as evidenced by the well crafted growth of the business over the last few years;
• Well credentialled board

• Strategic
• DTL has a growth-tailwind as the demand for its services continues to develop;
• As a capital-light business model the risk of major capex appears quite low;

• Financial
• Quality of earnings solid;
• Strong balance sheet;
• Working capital-light;

• Valuation
• FCF yield estimated at 5% which while ok, we need to focus on what will drive this higher in the years ahead.
• PER at c. 29x (based on my back of the envelope foward EPS estimate) compares to c. 37x when stock hit $7, so better value now than a couple of weeks ago;
• PEG ratio est. (FY22) 3.5x.... poor.... herein lies the rub, namely to what extent earnings will grow in FY22 and beyond.

In summary, DTL ticks a lot of boxes for me and the lower it drifts in the absence of any stock-specific bad news, the more interesting the investment opportunity may become.

As always, do your own research and any figures mentioned above are nothing more than my simple and personal calculations and should of course not be relied upon.

Good luck to all!