4x Earnings. 2.6x EV/EBIT. No Debt.
Growing margins, no debt, and a buyback at exactly the right time.
Key Metrics:
P/E: 4.1x
EV/EBIT: 2.6x
Net cash, no debt
Share count down 26% over three years
In investing, there are few combinations better than this:
A CEO who genuinely understands capital allocation and thinks like an owner.
A business that is growing and generating real cash.
And a share price that has not caught up to either of those things yet.
That is what I think I have found here.
The CEO came in a couple of years ago, looked at the business, and started making the right calls.
He shut down a subsidiary that was dragging on margins and had never recovered from COVID. He shifted the business away from low-margin contracts toward higher-margin work.
Then, when the shares were trading cheaply, he borrowed money at 8% to buy them back at an attractive earnings yield. After that, he paid the debt back as fast as the cash came in, and started growing the dividend as soon as it was gone.
That is not a complicated playbook. But very few actually follow it.
The underlying business has been growing in the meantime. The share count is down 26%, revenue is up meaningfully, margins have expanded, and earnings are growing.
Today the shares trade at a P/E of 4.1x and an EV/EBIT of 2.6x.