Stock price when the opinion was issued
Likes it, especially for the long term. He owns it in a few separately managed accounts. Well run, financially disciplined. Cleaned up debt. Has $200M in cash. Focus is like a mini-CSU, but doesn't have the scale yet. 40 global acquisitions over its history. 12-month price target of $36.50.
Pick it up in thirds here around $30, $28, and $26.50.
EPS of 37c beat estimates of 35.7c. Revenue of $130.5M slightly beat estimates of $129.7M. EBITDA of $37.7M beat estimates by 4.6%. Revenue rose 18%. EBITDA rose 13%. Recurring revenue rose 22.8%. Net income rosr 17%. Seachange is being integrated well. Net cash is $245M. Nothing too extraordinary here, but a beat and decent overall growth. Earnings are expected to rise 13% in 2025.
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Small caps get whacked when interest rates rise. If investment-grade companies borrow at 6%, small caps borrow at 10%. Russell 2000 rallied after the election, and has fallen ~8% in December. ENGH has no debt. Strong FCF, dividend grows 15-20% every year.
Q4 earnings were a bit light, so stock's fallen. They also made 2 acquisitions in the quarter. With small caps, you have to be patient. Yield is 3.87%, almost unheard of for a small-cap stock. Switching business model to SaaS, which should improve margins over time and you'll eventually get increased profitability. Stock's at a new 52-week low, and he's buying.
All his past picks on this date were small-caps and chosen, based on him expecting US interest rates to fall. All were turnaround plays. He used dollar-cost averaging. Fading interest in small-caps now, but he still likes ENGH. They are a serial buyer of private companies at good prices. Margins are rising so are increasing the dividend to 4.5%. But they're not large nor liquid. Is adding at these levels.
A mini-CSU, because they have built by strategic acquisition well. It hasn't excelled like CSU, because they haven't scaled their business yet. He targets $36.50.