ENGH

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You said in email that “We have decided to move on from the company.”, and sometimes removing a stock from bull list doesn’t mean sell. I don’t have stop loss for ENGH. Is it time to sell now, or is there still value to hold it? Thank you!

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Asked on March 14, 2023 6:28 am
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I believe there is still a chance we could see this company rebound. The window is closing on them, and more than a year of poor execution caused me to put a stop loss on the company a while ago to kind of lock in some price appreciation from it's rock bottom area around $24-25.

In our discounted cash flow analysis of Enghouse, we determined fair value at low single digit cash flow growth to be in the $38-40 range. We did state that if it could exceed that cash flow growth, fair value is much higher, likely in the $40's. However it seems more and more right now like the company is really struggling to deploy capital and as such, I'm more confident in that fair value of $38-40. It's trading at $36.50 right now, and we do like to keep our shortlists here a bit tighter so we decided to remove it.

Enghouse is fairly valued here, to maybe slightly undervalued based on our analysis. In that case, I am indifferent to either holding or moving on from the company. But it doesn't scream value like it did last June when the market was extremely pessimistic.

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Posted by Dan Kent
Answered on March 14, 2023 8:00 am