eResearch is pleased to publish an Initiation Equity Research Report on DATA Communications Management Corp. (TSX:DCM | OTC:DGPIF | STU:18DN).
We are Initiating Coverage on DCM with a Buy rating and one-year price target of $3.60/share.
You can download our 41-page Equity Research Report by clicking on the following link: eR-DCM-2021_08_16_IR-FINAL
Company Description:
DATA Communications Management Corp. (“DCM” or “the Company”) is a Canadian-based communications and marketing solutions provider that offers comprehensive online and offline communications and marketing solutions to businesses.
Its technology-enabled content and workflow management capabilities solve the complex branding, communications, logistics, and regulatory requirements of Canada’s leading enterprises.
The Company serves the cannabis, energy, financial, governmental, healthcare, insurance, lottery and gaming, not-for-profit, and retail industries.
Its services include custom loyalty programs, data and content management, location-specific marketing, labels and asset tracking, multimedia campaign management, and workflow management.
Investment Highlights:
- “Digital-First” Strategy to Grow Sales & Improve Margins. The Company is leveraging its existing DCM Flex and ASMBL platforms for direct-to-print applications, marketing and workflow management, and Digital Asset Management (DAM) solutions.
- Strong Cost Controls. Over the last five years, cost reductions and operational efficiency improvements have been a key focus for DCM to improve its margins and cash flow.
- Diverse Customer Base. DCM has a diversified customer base of over 2,500 clients that includes national retailers, banks, insurance companies, and government agencies. It serves over 70 of the 100 largest corporations in Canada and 3 of the 5 top government agencies.
- Low Valuation Multiple when Compared to Peers. DCM is currently trading at 0.5x 2021 EV/Revenue compared with US printer comps trading at an average of 1.0x EV/Revenue or Canadian printer comps trading at an average of 1.5x EV/Revenue, and well below the DAM & Tech-Enabled Workflow providers in the range of 3.1x to 6.6x EV/Revenue.
Financial Analysis & Valuation:
- We estimate DCM’s revenue & EBITDA as follows:
- 2021E: Revenue $245.0 million; EBITDA $15.9 million;
- 2022E: Revenue $252.4 million; EBITDA $25.5 million.
- We estimate an equal-weighted price target of $3.61 based on a DCF valuation ($5.84/share), a Revenue Multiple valuation ($3.10/share), and an EBITDA Multiple valuation ($1.90/share).
We are Initiating Coverage on DCM with a Buy rating and one-year price target of $3.60/share.
You can download our 41-page Equity Research Report by clicking on the following link: eR-DCM-2021_08_16_IR-FINAL
FIGURE 1: DCM 1-Year Stock Chart – Up Over 300% Y/Y
Notes: All numbers in CAD unless otherwise stated. The author of this report, and employees, consultants, and family of eResearch may own stock positions in companies mentioned in this article and may have been paid by a company mentioned in the article or research report. eResearch offers no representations or warranties that any of the information contained in this article is accurate or complete. Articles on eresearch.com are provided for general informational purposes only and do not constitute financial, investment, tax, legal, or accounting advice nor does it constitute an offer or solicitation to buy or sell any securities referred to. Individual circumstances and current events are critical to sound investment planning; anyone wishing to act on this information should consult with a financial advisor. The article may contain “forward-looking statements” within the meaning of applicable securities legislation. Forward-looking statements are based on the opinions and assumptions of the Company’s management as of the date made. They are inherently susceptible to uncertainty and other factors that could cause actual events/results to differ materially from these forward-looking statements. Additional risks and uncertainties, including those that the Company does not know about now or that it currently deems immaterial, may also adversely affect the Company’s business or any investment therein. Any projections given are principally intended for use as objectives and are not intended, and should not be taken, as assurances that the projected results will be obtained by the Company. The assumptions used may not prove to be accurate and a potential decline in the Company’s financial condition or results of operations may negatively impact the value of its securities. Please read eResearch’s full disclaimer.
