ValueSlant Posted January 17, 2012 Share Posted January 17, 2012 This is a consulting company. Looks cheap, but worried about how resilient revenues will be and have a fair amount of debt for size of company. Anybody looked at this one? More analysis of it here http://valueslant.com/2012/01/17/recent-activist-targets-wpp-iii/ ValueSlant Link to comment Share on other sites More sharing options...
magno111 Posted June 25, 2015 Share Posted June 25, 2015 There's and old thread , but lot has changed since then. This presentation give you an idea of what they do http://noble.mediasite.com/mediasite/Play/c5f2e1724866407781dc8271fdbc8fd21d?catalog=4c6a20e5-5fc7-46ee-917e-3aa3a03fba23 They are the middle man between IT providers and companies , they help clients to save money,once the contract is signed they supervise the whole project during its life ( recurring revenues), they also provide market analytics . It is a good business key points: -they have reduced leverage to 1x EBITDA -they are growing revenues at 7%-10%--> EBITDA grows at 2x revenues due to operating leverage -They are repurchasing shares and they issued an special dividend in January -The CEO ows a 10% stake. -They are growing recurring revenues, they target them to be 50% of total revenues by 2017 - this year they are going to do around 27M-30M EBITDA and, and 17M-20M FCF Valuation ( III:nasdaq - 4,85$) - They trade at 6x EV/EBITDA, but comps trade 10x-13x EV/EBITDA - P/FCF is 9x for 2015, comsp trade for 15x-20x ( huron, fti, hacket...) EBITDA 2015 = 28M ( 4m Capex, 2M interest, 5m tax )= 17M FCF -IF they hit their targets of 40M EBITDA by 2017 at 9x with buybacks, this is a 12$-10$ stock -Analysts are coming, they started coverage in the last weeks with PT between 6$ and 8$ - For example Hackett has the same size, ROIC and same trends and trades for 11x-12x EV/EBITDA... Negatives: -currency headwinds for 2015, but once they report in 2016 it will pass. Excellent Q1 results went unnoticed by the market due to currency effects... -they did poorly in 2008 , but there was a different management team and less recurring revenue. III was set up like an SPAC vehicle they had problems integrating things. Under the new ceo they haven't make new acquisitions in the last 3 years, they are open to it but no like in the past... -As any other consulting firm results are volatile Q over Q, FCF generation is also volatile due to working capital effects Thank you Link to comment Share on other sites More sharing options...
KJP Posted June 26, 2015 Share Posted June 26, 2015 How are you treating stock compensation? Link to comment Share on other sites More sharing options...
magno111 Posted June 26, 2015 Share Posted June 26, 2015 How are you treating stock compensation? sure, you should deduct it from EBITDA after-tax beneficts, this charge is around 2,7M a year Link to comment Share on other sites More sharing options...
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