The case for $1.5+

Not advice:
I think the market is really not giving IRI credit for the turnaround that seems to have been successfully navigated. Even though the price is up materially from the lows, I will explain why I believe it is worth significantly more.

IRI’s financials look great

· Very strong ROE

· Balance sheet is robust with $31.9m of cash and no material debts to speak of

· Nicely cash flowing business, no foreseeable needs for a cap raise

· I see no reason not to expect some decent sized dividends as they have ~20% of market cap in cash

· No material intangibles to impair

Some stats on the company:

· Market cap - ~$158m

· Revenue = $74-75m (pro-forma)

· EBITDA = $23-25m (guidance)

· EV = $158m-$32m = ~$126m (estimate)

· EV/EBITDA multiple of ~5.25x (estimate)

· EV/Sales = ~1.5x (estimate)

Compared to other tech companies:
Similar tech companies often trade at 10x sales, and much higher EBITDA multiples 15x +. I see no reason IRI can’t trade at similar valuations to what it has historically done in the past, or at least approach them. If you apply those multiples to IRI’s numbers you get:

· Sales multiple applied to IRI = $24m x 10x = $240m market cap + cash ~$32m = $270m

o That means a 1.9x to the current EV of ~$126m

· EBITDA multiple applied to IRI = $24 x 15x = $360m

o That means a 2.85x to the current EV of ~$126m

IRI has enviable financials with growing profits, strong cashflows and a strong balance sheet. It has historically traded at multiples similar to it’s peer group stated above. I see no reason why IRI’s valuation multiples shouldn’t improve materially from here. In FY20, the stock traded around $4 and the EBIT was $30.8m.

Why is IRI still a value stock?
I think there is a lot of negativity with the stock falling, but sentiment has started shifting and I believe will continue to.

My medium term price targets are $1.20-$1.50, long term $2-$4.

Not advice, DYOR, etc etc