Falling from Sky
Liquidity Service, the largest online surplus asset buyer market, starts in 2002. Over the past 12 years, it has grown by adjusted EBITDA at 40.4% CAGR and with 10% adjusted EBITA margin. Prices peaks in 2012 at 65 and fell down
to 12 now. They currently face short-term challenges.
* Adjusted: include adjustments for stock-based compensations and a portion of certain acquisition pyaments & goodwill impairment.
1) A Leader in Niche Market ( Surplus Asset buyer Market), little and no competitors.
Market is still in early stage. (2% penetration rate for now)
In recent two years, company continues to grow on top line (much slower than before), but not on bottom line.
$57 cash and No Debt
Proven Business Model and Management Team over the past 10 years.
2) currently it is being priced PE @ 12 and EV/EBIT = 4.7, significantly lower than peers in the industry.
3) Insider is buying it. You could buy stocks now lower than insider now! Insider owns a big chunk of stocks.
Before 2012 it grows EBITDA at 40.4%. I do not think it will stop growing. I think it will continue to grow above 12% given their resources. Timing is uncertain. But given their cash position and valuation, they could do so many things to increase their earning.
It will take a while for market to recognize it
Disclosure: The author is long LQDT.