Echelon Capital Markets analyst Mike Stevens has launched coverage of Decisive Dividend Corp (Decisive Dividend Corp Stock Quote, Chart, News, Analysts, Financials TSXV:DE).
In a report to clients August 18, Stevens initiated coverage of DE with a “Buy” rating and a one-year price target of $10.75, representing a return of 45 per cent at the time of publication.
Founded in 2012, Kelowna-based Decisive Dividend Corp acquires manufacturing-based businesses in diverse spaces such as wood stoves, truck components and road maintenance.
Stevens says the company has a winning and repeatable M&A strategy.
“Decisive’s disciplined buy, build, and hold M&A strategy has acquired ~$97M in enterprise value (EV) across 11 manufacturing businesses at immediately accretive acquisition multiples (average of 3.9x EV/EBITDA) before seeking to reinvigorate growth through strategic investments. The Company’s founder-friendly core tenets and access to capital have favourably positioned Decisive as an attractive acquirer,” the analyst said. “This, coupled with surging macro tailwinds, as ~56% of Canada’s baby boomer business owners plan to exit over the next five years (representing $1.5T+ worth of assets) (CFIB), helps forge a rich pipeline of opportunities to flow for many years to come. With our headline PT derived from a strictly organic forecast outlook (i.e., assuming no further acquisitions), our more plausible M&A Scenarios point to current per share valuations of $12.63/$14.53 across our Base/Bull cases, implying considerable upside beyond our PT.”
Stevens thinks DE will post Adjusted EBITDA of $24.4-million on revenue of $139.4-million in fiscal 2023. He expects those numbers will improve to EBITDA of $32.2-million on a topline of $168.2-million the following year.