The difficulty for me is coming up with a correct estimate of "fair value" for VTSI stock. Given the trailing actual company performance, the historic valuation metrics, the forward expectations, etc. it is still a tough one for me to nail down.
Right now the company has a $65mil market cap and an enterprise value of $46million. They have a decent history of both top line and bottom line growth but also have a penchant for being too-conservative with a too-inexperienced CEO and BOD at the helm.
Trailing FY2021 seems destined to come in at roughly $24million+/-.
Current FY2022 seems destined to come in at $30million+/-.
VirTra is also a nice "story sort of stock" and has a super clean capital structure and would be a great add for several competitors and PE groups. Think about how easy it would be for a great PE group to take it private, upgrade management, and IPO it two years later.
In today's market, I would say a conservative fair value would be a PS of 2.5 using EV. So (2.5 x 30) + 19 = $94million. This would equate to a stock price of $8.70.
But then if you factor in things like the market being forward looking and the PS valuations of competitors then one could make an argument for $16 to $20.
I am comfortable buying the stock now because while I can see many scenarios for a higher stock price it is difficult for me to see scenarios to justify a $4 or $5 price. Ok, I suppose it could take them two months to announce Q4 and they would miss both the Q4 and Q1 deadlines and then they could announce a $5mil number for Q4 and a $4mil number for Q1. So it is possible I suppose but me thinks those things are a 1 in 100 event(s).
