We have prepared the following four charts (see note) that in our view summarizes what we perceive to be the current undervaluation of Lleida.net as of 21st January 2020 with a share price of €1.35. (The following charts are based on taking the current daily price of the stock versus the 12-month forward sales or cash-flow actual or estimated numbers.)
Whereas in the first chart, the Enterprise Value to Sales ratio is now slightly above the last three years’ average….
Enterprise Value to Sales ratio
Source: Checkpoint Partners
… Lleida.net Ebitda margin has been expanding in the context of continued doubled digit sales growth (averaging 19% during the past 3 years).
Ebitda Margin
Source: Checkpoint Partners
Based on the increasing profitability of the business, we would assume a multiple expansion as the Ebitda (ex-cap) growth averaged 144% over the past three years. But the evidence shows, that has not yet happened…
EV/Ebitda (excl. capitalizations)
Source: Checkpoint Partners
Another way of looking into our perceived undervaluation is by looking at the cash-flow yield. The current cash flow yield of 8.4% compares now to the 7.4% historical average and it is our view that a cash flow generating company growing at double digits should have a cash flow yield of 5% or lower.
Cash Flow Yield
Source: Checkpoint Partners