Thanks for the reply
What you say is basically correct, I think. The market was clearly VERY disappointed with the latest result and guidance
I believe that the market is wrong (or at least has oversold) for these reasons:
1. Quality. TRJ produces quality, niche products that are hard to replace. Some people regard it as a producer of commodity products. It is not.
2. Growth of addressable market. The industries that it serves are almost certain to keep expanding for the foreseeable future
3. R&D potential. I don't include it in my valuation, and the market certainly doesn't. But TRJ has multiple potential future products and continues to spend on R&D
4. Price. The recent accounts are a bit messy due to aquisitions. Profitability is obviously low if you look at the published figures. But highly likely to improve in the future. Plus they expense most of their R&D spend. I believe that the best measure of value currently for TRJ is EV/revenue. Both of these figures are hard to manipulate and do not get messed up by accounting conventions or aquisitions. EV/revenue for TRJ is 1.41
For comparison:
Audinate (which is a true growth company, although still small, risky and unprofitable) trades at an EV/revenue of 10.04. Audinate has less than half the revenue of TRJ, but the market values it at 1110 million vs 178 million
Ansell (which is a large cap producer of a commodity product, gloves) EV/revenue is 2.04
If you believe that TRJ is likely to outperform Ansell over the next 5 - 10 years (I do), then it may be worth buying. I don't see it ever trading at an EV/revenue of 10 like Audinate, but a re-rate to say an EV/Rev of 3, combined with ongoing organic revenue growth, could yield a very nice increase in the share price from this point.
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Last
$1.19 |
Change
-0.010(0.83%) |
Mkt cap ! $181.1M |
Open | High | Low | Value | Volume |
$1.20 | $1.21 | $1.18 | $128.3K | 107.1K |
Buyers (Bids)
No. | Vol. | Price($) |
---|---|---|
1 | 5399 | $1.19 |
Sellers (Offers)
Price($) | Vol. | No. |
---|---|---|
$1.20 | 303 | 1 |
View Market Depth
No. | Vol. | Price($) |
---|---|---|
1 | 5399 | 1.190 |
1 | 2000 | 1.155 |
1 | 212925 | 1.140 |
4 | 59981 | 1.130 |
1 | 900 | 1.100 |
Price($) | Vol. | No. |
---|---|---|
1.200 | 303 | 1 |
1.230 | 5000 | 1 |
1.250 | 5986 | 1 |
1.290 | 5642 | 2 |
1.345 | 2222 | 1 |
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