DCM Reports Strong First Quarter Results as Revenue Grows, Margins Strengthen, and Debt Reduction Continues
DATA Communications Management Corp.is a Canadian-based provider of marketing and business communication solutions to companies in North America. Its technology-enabled content and workflow management capabilities solve the complex branding, communications, logistics, and regulatory requirements of leading enterprises so its customers can accomplish more in less time. Its services include printing, data & content management, labels & asset tracking, location-specific marketing, and multimedia campaign management.(1.0) COMPANY UPDATE: (1.1) DCM reported Revenue of $129.3 million in Q1/2024, up 69.9% from $76.1 million in Q1/2023, but lower than our estimate of $139.0 million. (1.2) Revenue fell short of expectations mainly because several projects from larger clients were postponed to later quarters. The Company reported that these projects are now scheduled for delivery in the second and third quarters of this year. To incorporate this change into our model, we lowered 2024 revenue to $542.3 million from $549.0 million, which negatively impacted our target price. (1.3) DCM reported that it added $1.9 million in new sales from 10 new clients and over $12 million in “expansion” revenue from existing clients that should be recognized over the next year. DCM is still targeting an overall annual organic revenue growth rate of more than 5%, including growing its marketing technology solutions by more than 60%. (2.0)FINANCIAL ANALYSIS & VALUATION: (2.1) We updated our model with DCM’s recent financials, shifted the model ahead one quarter, and reduced the revenue in 2024 to reflect the lower first-quarter number. (2.2) We estimate an equal-weighted price target of $6.75 based on a DCF valuation ($9.56/share), a Revenue Multiple valuation ($6.15/share), and an EBITDA Multiple valuation ($4.60/share). (2.3) We are maintaining our Buy rating but lowering our one-year price target to $6.75 from $6.90.
Data Communications Management is an unincorporated, open-ended, limited purpose trust. Through its subsidiaries, Co. is engaged in the provision of total document management solutions including printed products. Co. offers a variety of print and electronic products and related services, which include traditional business forms, labels, direct mail products, security documents, commercial print, and facility and print management.
eResearch Corporation, which was founded in 2000, is a respected source for institutional-quality, equity research focused primarily on small- and mid-cap companies. Our focus is on identifying companies that have interesting prospects, sound management, and significant potential for share price appreciation.
We also provide research reports on middle and larger-sized companies, using a combination of fundamental and technical analysis. We complement our corporate research coverage with a diversified selection of informative, insightful, and thought-provoking research publications from a wide variety of investment professionals. We provide our professional investment research and analysis directly to our extensive subscriber network of discerning investors, and electronically through our website, www.eresearch.com.
We are not affiliated with or owned by any financial institution, investment banker, brokerage firm, or investor-related organization. We are a private firm, 100%-owned by employees and private investors.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.