"While Big Un certainly trades on a big valuation,"
I disagree with that statement. Maybe if you simplistically look at widely published rear-view valuation metrics you would think that, but if one digs a little deeper then Big Un looks cheap.
From my perspective Big Un looks to be substantially undervalued. I won't go into my full valuation here, let's keep it simple.
In Q4 FY17 it bought in $9,365k cash and had net operating cash flows (OCF) of $3,826k for around a 41% cash flow margin.
Extrapolating from one quarter cash flow is fraught with danger, but let's do that to keep it simple.
Q1 FY18 Big will bring in over $14 million in cash.
If Big maintains similar margin that'll deliver $5.7 million in OCF.
That gives a run rate of $22.9 million OCF. BIG has a fully diluted market cap of $227 million when all its deep in the money options are included.
That means this hyper growth company, that is now self funding and spitting out a growing pile of cash, is trading at a low multiple of less than 10x run rate OCF.
While a 41% cash flow margin may be hopeful, looking at the margins and growth from a multitude of likely outcomes all point to BIG being cheap.
If anyone can point me to any ASX company with similar attributes please do so.
