Hi there,
Sangoma has taken quite the breather recently. It is actually in negative territory with a loss of ~13% YTD and this is somethign we are not all that suprised by. The comapny's share price got ahead of itself. Why? It was posting some excellent growth numbers and had they managed to maintain that 40%+ growth, then the share price would have been just fine.
However, investors were missing the fact that growth was expected to slow. Now that the reality has set in, valuations have come down. The company is expected to grow revenue by 54% this year, but then that drops to 10% in 2023. As you can see, it is a little inconsistent. Not to take anything away from these type of growth rates, they are quite solid. The company has a decent histroy of meeting estimates, except in the last three quarters it missed on revenue. That is likely also weighing on its stock.
This company is a little like CGI, OTEX, CTS, etc in which it relies on acquisitions to drive growth. So far, it has proven to be a pretty good capital allocator and i don't see any reason why the current management team can't keep it up. Sangoma is expected to release Fiscal 2022 guidance at the end of September, so will be interesting to see where it comes in compared to estimates. It has a history of meeting or exceeding its own guidance, so that would be a good barometer against which to measure the company.
It is however, worth nothing that the company still isn't cheap despite its pullback. It is trading at 42 times forward earnings, a forward P/S of 1.6 and EV/Revenue ratio of 3.2 - all of which are more expensive than peers. It does however, have higher expected growth rates - especially in Fiscal 2022.
Overall - decent company, not cheap but not overly expensive if it can hit estimates for Fiscal 2022. Do pay attention to guidance when it comes out. If it is below or above estimates (revenue and EBITDA being key), it is likely the company's share price will move accordingly.
For reference, analysts are expecting:
-Revenue: $257.6M
-EPS: $0.043
-EBITDA: $44.06M
-EBITDA Margin: 7.10%
Mat