A cheap compounder with a kicker
A low-to-mid-teens EPS grower at an 8% FCF yield.
Hello, Ultimate Value readers!
I am back with a new idea today. Here are some of the takeaways:
The stock is European-listed, with a market cap of €3.3B and an EV of €3.6B.
Liquidity (ADTV) is solid at $3.6m USD per day.
This is a high-quality business: low churn, high margin, low capital intensity, etc.
The stock recently sold off on a failed M&A attempt. Non-fundamental selling from arbs has created a very timely buying opportunity.
The business is inflecting as headwinds have turned to tailwinds. I expect the business can grow revenue at a HSD/LDD rate, with earnings compounding faster.
At a 20x EPS/FCF multiple, this could have a ~ 70% upside over the next 12-18 months.
Let’s take a look.