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KIT digital, Inc. Message Board

  • gettheedgethenhedge gettheedgethenhedge Mar 31, 2012 12:25 AM Flag

    KITD value

    KIT Digital is expensing/investing 16 mil in 1st half of 2012:

    "Our additional commitment of resources in Q4 and our incremental investment and rationalization plan of approximately $16 million in the first half of 2012 should reinforce our leadership position. This increased investment will go towards sales and marketing, R&D, and client services capabilities to support future growth, and we expect the rationalization of certain offices and client service centers to lead to savings of up to $10 million in 2013." (From Q4 earnings release)

    This leaves KITD FCF negative in the 1st quarter. Even with this they are guiding 25-35 mil of FCF this year. With incresing revenues and margins it seems like a layup to get to 50+ million of FCF in 2013. So at the current market cap of ~ 330 mil this is about 15% FCF yield. This is an "extrodinarily" high FCF yield for a high growth tech co.

    Also BCOV is trading at 6X 2013 Revenues. If KITD was trading at 6X 2013 revenues (~400 mill) it would have a market cap of 2.4 bil. On 50 mil shares KITD would be a ~$48 stock. By the way, BCOV will not be FCF positive until the end of 2013. KITD starts and stays FCF positive next quarter.

    With this in mind, I hope they don't sell, so, as a shareholder I can participate in all of the upside of this "grossly undervalued" company.

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