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Emblem Corp has 40% upside, Echelon Wealth says

Emblem Corp

Emblem Corp
With its financings now complete, Echelon Wealth Partners analyst Russell Stanley has refreshed his model assumptions on Emblem Corp. (Emblem Corp. Stock Quote, Chart, News: TSX:EMC) and finds the stock still has plenty of upside.

On November 15, Emblem Corp announce it had completed a bought deal financing that netted the company $28.8-million. The company said the vast majority of the proceeds would be used to fund its new 170,000 square-foot Paris Roads facility.

Stanley says although his estimates for Emblem Corp have been revised downward slightly, they are offset by a higher multiple.

“We last revised our 12-month target price in late August,” the analyst explains. “At that time, the adjusted average EV/C2019E EBITDA multiple for the peer group was approximately 7.0x. The peer group multiple has since climbed 80% to 12.6x. On that basis, we are increasing the multiple we use to value EMC from 8.5x to 12x, based on our EBITDA estimate for 2019 (EMC has a December 31 FYE).

In a research update to clients Tuesday, Stanley maintained his “Speculative Buy” rating and one-year price target of $2.25 on Emblem Corp., implying a return of 40 per cent at the time of publication.

Stanley thinks Emblem will generate Adjusted EBITDA of negative $6.9-million on revenue of $2.7-million in fiscal 2017. He expects those numbers will improve to EBITDA of negative $4.5-million on a topline of $10.9-million the following year.

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About The Author /

Cantech Letter founder and editor Nick Waddell has lived in five Canadian provinces and is proud of his country's often overlooked contributions to the world of science and technology. Waddell takes a regular shift on the Canadian media circuit, making appearances on CTV, CBC and BNN, and contributing to publications such as Canadian Business and Business Insider.

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