Savvy Trades and Investments

[abh3vt]

I understand about the concerns about non-GAAP earnings. That's why I usually pair it with EV / EBITDA. If EBITDA isn't growing, and its ratio to EV is high then I stay away. So many higher growth companies/tech companies use options and have intangible amortization that can make earnings look low, but on a pure cash flow basis they are cheaper than they look on a GAAP earnings basis and thus attractive to potential acquirers. Value "traps" can look cheap on a PE basis but they might have higher EV/EBITDA ratios because of debt or sneaky converts and NCIs. If adjusted EBITDA and pretax margin isn't growing y/y, that's a red flag.

Speaking of sneaky converts, I reread the FVRR 20F, and they can't force the convert holders to take shares as payment in 2025. In fact, they have to pay them in cash (which is a good deal for the convert holders.) So the Ev / EBITDA ratio is a lot higher than I first calculated, probably closer to 12x. They do have plenty of cash available to pay it off, but it will cut their cash balances by more than half if they don't refinance some of it. I've lowered my price target on FVRR