MediaValet Acquisition Multiple Bodes Well for DCM’s Valuation as its Pays Down Debt and Focuses on Tech Strategy
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 & Industry Updates: (1.1) STG Partners’ acquisition of MediaValet Inc. for $79 million, valued the company at 5.0x Revenue, indicating a positive outlook for the valuation of other Canadian SaaS and DAM companies. DCM, with a current trading multiple of 1.0x EV/Revenue, could benefit as it advances its Print-to-Digital strategy and increases SaaS revenue. DCM continues its guidance of 5% organic revenue growth and growing its marketing technology solutions at more than 60% in 2024. (1.2) DCM completed the sale and leaseback of its Trenton, Ontario facility for $9.0 million. The recent series of sale and leaseback transactions have collectively raised $37.8 million in net proceeds and paid down acquisition-related financing following the acquisition of Moore Canada Corporation (MCC) in April 2023. (1.3) DCM secured a 5th place ranking in the 2024 OTCQX Best 50, reflecting its significant growth, following the acquisition of MCC. This recognition highlights DCM’s performance, enhanced market liquidity, and commitment to high financial and governance standards, positioning the company for sustained growth and long-term value creation. (2.0) Financial Analysis & Valuation: (2.1) At this time, we did not update our model. We are awaiting 2023 financials that are expected near the end of March 2024. (2.2) We estimate an equal-weighted price target of $6.90 based on a DCF valuation ($9.31/share), a Revenue Multiple valuation ($6.17/share), and an EBITDA Multiple valuation ($5.10/share). (2.3) We are maintaining a Buy rating and a one-year price target of $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.
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