Buybacks Below Net Cash
Key Metrics:
0.74x net cash
0.50x NCAV
7.7x earnings
Buying back shares
Anytime you find a profitable, US-based business trading below net cash, you should stop everything and take a closer look.
Because that kind of valuation does not exist in private markets.
That is something you only get in public markets when something is either extremely overlooked or extremely out of favor.
With this business, it is the first one.
The business is extremly overlooked.
There are no writeups on this anywhere.
Not on Substack, not on Seeking Alpha, not on Value Investors Club. Nowhere.
The business itself is not exciting. It does not make anything you would read about in the news, and it has nothing to do with any hot trend.
But the valuation is exciting.
And that is enough for me.
It trades at 50% of NCAV and even below net cash.
26% below net cash, to be precise.
The business has no debt and management is buying back shares, which is probably the best use of capital at a valuation like this.
And it is profitable, trading at 7.7x earnings.
At this price, every share of inventory, every customer relationship, every piece of equipment, and every dollar of future earnings is being handed to you for free.
Actually, better than free. You are effectively being paid to take it.
Let’s take a closer look.