Tecnotree: Keeping a close eye on cash flows
Tecnotree's Q4 report exceeded our estimates for both net sales and earnings. However, the outperformance was largely explained by higher-than-expected capitalization of product development costs. With investments and working capital tied up, cash flow was well below zero. The guidance for the current year was strong on earnings, which led us to raise our earnings estimates for the coming years. However, we also updated our cash flow projections for working capital and investments, which lowered our free cash flow projections for the next few years. The valuation of the stock is favorable on earnings multiples (2023e P/E 10x), but we are paying more and more attention to cash flow multiples in the valuation. These don't support the valuation this year and next year's multiplier (13x) is fairly neutral.
Tecnotree
Tecnotree operates in the IT sector. The company specializes in the development of digital communication solutions. The services include, for example, business process and subscription management services for customers in telecom and other digital service providers. Operations are held on a global level, with the largest presence around Asia, Africa and the Middle East.
Read more on company pageKey Estimate Figures2023-02-27
2022 | 23e | 24e | |
---|---|---|---|
Revenue | 71.6 | 80.2 | 86.7 |
growth-% | 11.53 % | 12.00 % | 8.14 % |
EBIT (adj.) | 18.3 | 21.0 | 25.5 |
EBIT-% (adj.) | 25.57 % | 26.21 % | 29.38 % |
EPS (adj.) | 0.04 | 0.05 | 0.06 |
Dividend | 0.00 | 0.00 | 0.00 |
Dividend % | |||
P/E (adj.) | 16.80 | 122.39 | 99.66 |
EV/EBITDA | 9.42 | 74.90 | 61.75 |