DATA Communications Management is a Canadian-based provider of marketing and business communication solutions to companies in North America. Its technology-enabled content and workflow management capabilities solve the complex branding, communications, logistics, and regulatory requirements of leading enterprises, so its customers can accomplish more in less time. Its services include printing, data & content management, labels & asset tracking, location-specific marketing, and multimedia campaign management. (1.0) COMPANY UPDATE: (1.1) Revenue in the Quarter Up 11.4% Year-over-Year: In Q3/2022, DCM reported Revenue of $63.4 million in Q3/2022, up 11.4% from $56.9 million in Q3/2021, and higher than our estimate of $57.2 million. Revenue per employee over the past year reached $287,800, up more than 40% over the last five years. (1.2) DCM Added $8 Million of New Business During the Quarter: The Company reported that it has received more than $30 million in new business year-to-date and its tech-enabled service pipeline remained strong. (1.3) Company Reduces Debt: DCM continued to pay down the higher cost fixed-term debt, which is now at $25.1 million, down from $34.1 million at the end of 2021. (1.4) Multiples Still Trading Below Peers. DCM is currently trading at 0.5x 2022 EV/Rev compared with Printer comps trading at 1.0x EV/Rev, and well below the Digital Asset Management & Tech-Enabled Workflow providers trading at 3.5x and 1.9x EV/Rev, respectively. (2.0) FINANCIAL ANALYSIS & VALUATION: (2.1) We are raising our 2022 Revenue estimate to $265.3 from $259.1 million based on the higher revenue in Q3/2022. We are maintaining our revenue multiple at 0.8x and our EBITDA multiple at 7.0x, but increased the WACC to 14% from 10%. (2.2) We estimate an equal-weighted price target of $4.44 based on a DCF valuation ($6.96/share), a Revenue Multiple valuation ($3.45/share), and an EBITDA Multiple valuation ($2.90/share). (2.3) We are maintaining a Buy rating and increasing the one-year price target to $4.50 from $4.20.
11 Nov 2022
Double-Digit Quarterly Revenue Growth Continues Positive Business Momentum and Strong EBITDA
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Double-Digit Quarterly Revenue Growth Continues Positive Business Momentum and Strong EBITDA
DATA Communications Management Corp. (DCM:TSE), 0 | DATA Communications Management Corp. (DCMDF:OTC), 0
- Published:
11 Nov 2022 -
Author:
Chris Thompson -
Pages:
18
DATA Communications Management is a Canadian-based provider of marketing and business communication solutions to companies in North America. Its technology-enabled content and workflow management capabilities solve the complex branding, communications, logistics, and regulatory requirements of leading enterprises, so its customers can accomplish more in less time. Its services include printing, data & content management, labels & asset tracking, location-specific marketing, and multimedia campaign management. (1.0) COMPANY UPDATE: (1.1) Revenue in the Quarter Up 11.4% Year-over-Year: In Q3/2022, DCM reported Revenue of $63.4 million in Q3/2022, up 11.4% from $56.9 million in Q3/2021, and higher than our estimate of $57.2 million. Revenue per employee over the past year reached $287,800, up more than 40% over the last five years. (1.2) DCM Added $8 Million of New Business During the Quarter: The Company reported that it has received more than $30 million in new business year-to-date and its tech-enabled service pipeline remained strong. (1.3) Company Reduces Debt: DCM continued to pay down the higher cost fixed-term debt, which is now at $25.1 million, down from $34.1 million at the end of 2021. (1.4) Multiples Still Trading Below Peers. DCM is currently trading at 0.5x 2022 EV/Rev compared with Printer comps trading at 1.0x EV/Rev, and well below the Digital Asset Management & Tech-Enabled Workflow providers trading at 3.5x and 1.9x EV/Rev, respectively. (2.0) FINANCIAL ANALYSIS & VALUATION: (2.1) We are raising our 2022 Revenue estimate to $265.3 from $259.1 million based on the higher revenue in Q3/2022. We are maintaining our revenue multiple at 0.8x and our EBITDA multiple at 7.0x, but increased the WACC to 14% from 10%. (2.2) We estimate an equal-weighted price target of $4.44 based on a DCF valuation ($6.96/share), a Revenue Multiple valuation ($3.45/share), and an EBITDA Multiple valuation ($2.90/share). (2.3) We are maintaining a Buy rating and increasing the one-year price target to $4.50 from $4.20.