Tuesday, January 31, 2017 7:03:39 PM
COV.V - Update on Q1
All $ amounts in $CAD. I listened to the teleconference.
Covalon announced $5.5M in revenues and $500k in net income or EPS of $.03. They should well surpass $20M in sales in Fiscal 2017 (Oct 1 to Sep 30)
Sales and Marketing expenses saw a significant increase @ $2.8M for the quarter or about 50% of revenues. The CEO was hesitant to discuss specifics with competitors and potential acquirers on the phone call but a good portion of these were due to one-time costs to secure the $20M in Saudi Arabia contracts for 2017. They have also hired a new sales team and are aggressively pursuing new markets.
If you call 50% of those Sales and Marketing Costs as one-time then EPS jumps to $.14 or $.56 annualized. On that assumption COV.C would be trading a P/E of 4X and the company will quadruple sales from $5.7M in F2016 to north of $20M in F2017.
Covalon has no debt is trading at a $44M MC or roughly 2X annualized revenue for a company that just quadrupled sales.
If lower S&M expenses and positive EPS is confirmed for Q2, and Covalon can announce some success in securing new contracts (US, Europe, Aisa, South America they are targeting now) then Covalon should be trading much higher than $2.30 at that point IMO.
All $ amounts in $CAD. I listened to the teleconference.
Covalon announced $5.5M in revenues and $500k in net income or EPS of $.03. They should well surpass $20M in sales in Fiscal 2017 (Oct 1 to Sep 30)
Sales and Marketing expenses saw a significant increase @ $2.8M for the quarter or about 50% of revenues. The CEO was hesitant to discuss specifics with competitors and potential acquirers on the phone call but a good portion of these were due to one-time costs to secure the $20M in Saudi Arabia contracts for 2017. They have also hired a new sales team and are aggressively pursuing new markets.
If you call 50% of those Sales and Marketing Costs as one-time then EPS jumps to $.14 or $.56 annualized. On that assumption COV.C would be trading a P/E of 4X and the company will quadruple sales from $5.7M in F2016 to north of $20M in F2017.
Covalon has no debt is trading at a $44M MC or roughly 2X annualized revenue for a company that just quadrupled sales.
If lower S&M expenses and positive EPS is confirmed for Q2, and Covalon can announce some success in securing new contracts (US, Europe, Aisa, South America they are targeting now) then Covalon should be trading much higher than $2.30 at that point IMO.
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