The stock may be way down over the past half-year but investors could do well by mdf commerce (Mdf commerce Stock Quote, Charts, News, Analysts, Financials TSX:MDF), especially after a recent game-changing US acquisition.
Mdf commerce announced earlier this month a definitive agreement to buy e-procurement solutions company Periscope for $259.9 million, a move which mdf says will solidify its position as a leading e-procurement company in North America.
“This accelerates our vision to become a leading player enabling the flow of commerce for the B2B and B2G markets,” said Luc Filiatreault, mdf’s President and CEO in an August 11 press release.
Montreal-headquartered mdf provides e-commerce solutions for enterprise and government customers through its platforms, Strategic Sourcing, Unified Commerce and emarketplace. The company has major clients such as global supermarket powerhouse Aldi, which late last year announced it had taken on mdf commerce to handle its UK Click & Collect online shopping and curbside collection.
It was deals like that which buoyed the market’s estimation of mdf last year, where the stock rose 78 per cent in 2020 and continued on to higher gains over January of this year. Then came a big pullback, however, where MDF has now dropped more than half of its value since February, bringing the stock from a high of $16.76 in February to now below $8.00.
But the Periscope acquisition should be big for mdf.
Portfolio manager Stephen Takacsy said in a recent segment on BNN Bloomberg that mdf is benefitting from the accelerating migration of commerce to online platforms.
“Mdf is a solutions provider for much larger, complex corporations. Like Shopify does for small business, with much more integration work involved,” said Takacsy, president and CEO of Lester Asset Management, who spoke on BNN Bloomberg on June 23.
“They’re consolidating [the public procurement] industry, which is very regional and very fragmented in the US and they’ve been making acquisitions in that space, which is very synergistic for them,” Takacsy said.
“You have 80 per cent of their sales which are high-margin, recurring SaaS revenues. It’s dirt-cheap and trading at around 2x revenue when all their peers are trading at 4-8x and as high as 40x for the likes of Shopify,” he said. “This company is much more valuable than it’s trading at today.”
Earlier this month, mdf commerce announced its financial results for its fiscal first quarter 2022, which saw revenue climb ten per cent year-over-year to $22.6 million. By segment, the company said its e-commerce solutions and Strategic Sourcing revenue grew by 15 per cent each while its US-based Strategic Sourcing grew by 32 per cent.
“We continued to win new contracts this quarter and we saw a steady on-boarding of public agencies and suppliers for Strategic Sourcing. Our sales pipeline is healthy and gives us confidence that our organic growth will gain momentum in subsequent quarters,” said Filiatreault in a press release.