1.2x EV/FCF. 0.6x book value. 8x earnings.
I found this really cheap stock.
The headline numbers are striking:
1.2x EV/FCF.
0.6x book value.
8x earnings.
Free cash flow has been positive every single year for the last ten years.
Cash sits at 80% of the market cap against essentially no debt, and management is actively returning that cash to shareholders.
Of course these numbers got me interested.
Anytime a company trades below 2x EV/FCF, it’s worth taking a close look.
So I started digging.
I was looking for a catastrophic risk that would explain these numbers.
I did not find one.
There is no ugly behavior toward shareholders.
No hidden liabilities.
No dilution, if anything the opposite. The share count has been shrinking for years.
No M&A adventures either.
Management doesn’t come across as promotional. There’s been no super optimistic outlook, and no growth targets dangled to pump the stock. Pay is reasonable too.
Insider ownership is high enough to align interests, but the float is still large enough that anyone can build a position.
There’s some customer concentration, but nothing that wouldn’t be considered normal for a microcap.
And the most plausible endgame here is probably a privatization offer from the controlling shareholder group.
So here’s what we’ve got: a cheap valuation, no obvious red flags, and a possible catalyst somewhere down the road.
I like that setup.